Research Help Needed

[VastHorizon]

I have to do an informal research/study for my Economics class and I chose to do something related to food.

It would be great if you could vote in the poll and post an answer explaining your side.

Here's the scenario:

Put yourself in the shoes of the consumer.

Because of inflation, increase in demand, and decrease in resources, the producer (me), needs to make a change in my marketing strategy.

Let's say that I am a baker and I sell cakes and I need to make a move in order to keep a steady income yet keep my customers happy.

Here's the deal. The specs of what I sell:

- 8 inches in diameter
- 3 inches in thickness
- 10 different flavours
- every square inch is loaded with treats like nuts, frosting, fruits, etc.
- the "cake base" (I don't know what you call the foam-ish thing) is really dense and delicious

In order for me to be keep a steady income, I would have to sacrifice something. If you were the consumer, would you rather buy a cake which is:

1. Less in size (diameter and thickness 8 & 3 inches down to 6 & 2 inches) and less treats yet the price will not increase.

2. Less treats, less flavours offered, and a little variation to the "cake base" so it's not as delicious anymore yet the price will increase by only 10 - 15%.

3. Same cakes offered yet increase by 20 - 30% in the price.

 

[RevaD]

I'd take #3, provided the increase really seems needed. And as a savvy web-cinsumer, I'd know if you were jsut increasing too much. You don't need a prfit increase...you need to lessen losses.

 

[basschick22]

Hmmm...

In my opinion, I would offer the option of having smaller, more plain cakes (no nuts, fruits) at the 'original' price or with a minimal increase. Then add an increase for the cakes with the "treats" and that are a bit more fancy.

I guess option 2 is closest to what I had in mind. I've no background in Economics, though.

I work in a donut shop in the morning, and most of the customers at the shop that I work at have been "okay" with any price increases over the last year. Most consumers understand that the business owners have taken a hit in this economy too, and therefore don't complain (too much) about any increase because, as they say, "everything's gone up." I can tell you that the price of flour and sugar (among other things) have gone through the roof.

Also, as a consumer, I take into consideration the fact that buying cakes is a luxury as opposed to a necessity. With the understanding that everything costs more than it used to, this little "extra" will not be any exception to that rule.

Like stoppin' by the coffee shop every morning before work for your cup of coffee versus making your cup of coffee at home before work.
mmmm...coffee sounds kinda good right now....

 

[v8ko]

I dont care for a lot of stuff crammed intoa cake so I picked choice 2. I would have picked choice 1 but you would be making the cake to small, losing 35% of the cake is not the answer.

 

[mrpesca]

#1, quality over quantity. I don't want an inferior copy of the cake that looks similar but tastes worse. (That's like buying a Gibson knockoff) I want the same taste and I don't want to spend more so I will eat less and savor it. Unless of course I'm feeding it to fat relatives then I'll buy the biggest, cheapest one you got.

I'm thinking that unless this is a specialty cake that only sells because it's so good that most folks will choose #2. If it's a cake that is for sale in La Jolla, Ca then it doesn't matter how much you raise the price, the rich folks will still buy it regardless of cost. In fact, you might sell more of them because now is regular people cannot afford them and it's a status thing.

 

[b-squared]

I picked #3. If your company has a signature product, you cannot change it without losing your following.

Quality HAS to stay the same. Your 'regulars' will pay the cost.

Also--start making cupcakes.

BB

 

[Gunner]

I've tasted your products Vast and they're terrible so getting less is better so that's why I picked #1. But seriously, most food manufacturers simply make their product smaller and charge the same price for an increase in profits. It worked really well for Tim Horton's Donuts in Canada.

 

[05jrock]

#3

People understand that you have to increase prices because of rising food prices.
The bakeries I have worked in have done this.The price of flour has doubled in the last 18months and with oil going up as it did,Delivery prices went up aswel.

What we done was to make cheaper icing and decorated the cakes differently.

 

[Leumas]

I voted choice three. Everyone understands that things cost more as time goes by...especially if you are a one-off shop and not a cake chain. Don't make sacrifices to the product itself, you're just shooting yourself in the foot that way.

Separate question, options one and two have more than one variable in them, while option three is more straightforward...does this make a difference? Suppose you had an option, make a smaller cake exactly the way you make the existing product and offer it at the current price?

 

[b-squared]

Separate question, options one and two have more than one variable in them, while option three is more straightforward...does this make a difference? Suppose you had an option, make a smaller cake exactly the way you make the existing product and offer it at the current price?

My thoughts as well.

 

[Cookie-boy]

I agree.........and I don't even eat cakes!

 

[geochem1st]

I picked neither. You don't have enough information to make an informed decision.
What does your customer value most?

If they buy your product because it is the least expensive of its type, then you give them less product for the same low price.

If your customer values the size for price, maybe you cut on tasty ingredients.

If they value taste and not price of your product... you get the idea.

You need to conduct a consumer survey first so that you don't sink your company. Give the customer what THEY want.

 

[hipofutura]

You don't have enough info to make an informed decision. If you are unable to perform proper market analysis, I would produce all three options for a market test and let the consumer vote.

 

[TOMMYTHUNDERS]

i'd go over to DQ and buy a

 

[mrpesca]

Actually, I'll have my cake and eat it too.

 

[Harmony]

I picked neither. You don't have enough information to make an informed decision.
What does your customer value most?

If they buy your product because it is the least expensive of its type, then you give them less product for the same low price.

If your customer values the size for price, maybe you cut on tasty ingredients.

If they value taste and not price of your product... you get the idea.

You need to conduct a consumer survey first so that you don't sink your company. Give the customer what THEY want.

I owned and managed a retail business not long ago and we had to make changes because of costs going up.

It wasn't as simple of just increasing the retail price because some of the selections were pricey enough and we had to be competitive to anyone else selling them or similar.

My ex used to just increase the prices but I decided to find out what the customer wanted. What were their needs. Was there something customers wanted that we didn't carry.
I also researched some new suppliers for better Man prices or I told our current suppliers that I was thinking of going elsewhere unless they gave me a bigger discount It worked

Now..in your case, a cake containing nuts did sell ok, but not as quick or as many as another cake with different toppings, then we would rather find an alternative to what would sell more.

I found that the more we carried what the customers actually wanted, the more we sold.
Regarding price increase, we found that if there was something that customers really needed and couldn't find so easy they were very willing to pay that extra more.

We also carried merchandise on the cheaper end for those that basically couldn't afford the higher end stuff or basically didn't want to spend that much. Quality maybe be less but they sold very well still.

To some less tastier cake may make no difference. Cater for all kind of stomachs lol

 

[Harmony]

My local cake shop decided to change the way they did business.

They changed their hours to 5am till 11am. They get all the school crowd and all those on the way to work.

We wish they stayed open later but apparently they are sold out by that time.

I wish I could go down there and convince them that if they stayed open later, they would make more money. Cater for lunch times.