Product, Pricing, and Channels Paper
Product, Pricing, and Channels Paper
The following paper reviews how the Magnolia Bakery, offers its products and services to a target markets that are considering fresh bread from the oven every day delivery at the customers’ doors, early in the morning, for family breakfast. This discussion reviews include several areas such as the product features and benefits; the phases of the product’s lifecycle; the packaging of the product; the pricing strategy, and the channels of distribution.
Magnolia Bakery offers four new items on its already extended list of products. These are four different kinds of bread. The choices of bread were carefully chosen to offer quality and healthy benefits. The choices are: Baguette, Black Bread, Focaccia and Bagels. Each one of these types of bread has a particular texture and taste that will give to the customer a great breakfast experience: Baguette is a thin loaf of French bread with a crisp crust, very characteristic of France. The Baguette is made with wheat flour and no added additives; Black Bread, or Rye Bread, is made with various quantities of flour from rye grain. Rye is a cereal grain, which gives a dark color and more dense texture from the wheat flour breads. This bread has important qualities because it holds a substantial amount of fiber and small amount of fat.
This is good bread for diabetic patients since it doesn’t cause a spike in blood sugar, as the other breads do. Focaccia Bread is another option. This is a more flat bread topped with olive oil and herbs. The texture of Focaccia Bread is similar to the pizza dough, and it is made with high-gluten flour. Our Focaccia will be have supplements with nutritive value and low calories using little amount of olive oil. And for last, but not least-the Bagel-all American breakfast bun. Bagel is yeasted wheat dough bread first boiled and then baked. Bagel will be a product that can be offered to the Jewish community. With these new items, that Magnolia Bakery wants to provide, it will offer a new service of delivery, from 5:00 to 10:00 am, directly to the door of the customer.
Product Life Cycle
The lifecycle of the bakery would have started with the introduction stage and that would have consisted of the target marketing, price, distribution, and promotion. The price had to be adjusted around the culture and the quality of the product. The distribution step would have included on how they would make the bread and where they would make bread in order to give it to the customer. The next that the bread company experienced in the beginning would have been the marketing part. Now with marketing is where they figured out who, what, and whys of who they would want to market too. This stage is important because if a customer like the service that is being provided, word of mouth travels fast. The information that is gathering through marketing and the customer is what products they like and how often certain breads or pastries are purchased. The growth stage is vital because this is where the company depends on the customer and the company pushes forward their name within the industry. In this stage there should be an increase in marketing, distribution, promotion, and pricing.
Pricing is a big deal because the product should never be over priced however, the bakery is indebted to the investors for some years so this should evaluated. The items that are baked are done within the store and they are not resold. Within the maturity stage is could be a long wait because this is where over cost has subsided and the bakery will begin to see the fulfillment of their hard paying off. The business began to become more lucrative and the business can began to look within some other options. The options could include building another store in other states or around town. The decline stage is not necessarily a company closing its door, but it could also mean it is being sold off to a corporate minded company and being able to grow. This could include a name change for them or relocation. In could also mean changing the color of a product and making if different. However, with a bakery they could do a face lift on the building and do a reopening. It is vital that all these stages have a plan to go along with it, because if not during the decline a business can close their doors forever. The cycle may not always go in this order but it will give a good idea of what may happen.
With packaging for backed good there are many ways to add value to the product. Going green: the company can purchase boxes and bags for their bread products that are recycled, the use of pot consumer materials can reduce the carbon footprint and this is something that some consumers look at in recent years. Coupons: the addition of coupons to the packaging can help to gain reoccurring business, if you buy a loaf of bread and the box has a coupon for a free loaf when you buy 2, this could help to expand on other products as well. (Imagine a coupon for a free dozen muffins when you buy 2 dozen at regular price) Vibrant designs: the use of vibrant colorful designs on the packaging may help to peak interest in the product contained within. If you are at a neighbor’s home and they have a beautiful blue and gold box sitting on the table, this may peak interest in what is inside the box.
Other ways to increase the value of a product in this case could be to have a menu on the box, perhaps you open the bag and printed on the inside (safely) is a copy of the menu of products sold by the establishment, and this can be a constant reminder of what other products are available every day. Though some of these ideas may cost more than others, the ideas to draw the consumer in, so they will consume more product the appeal is one way to increase consumer traffic. One last way to increase value of the service would be to include a survey with the delivery; this survey could help critique the performance of the delivery driver as well as the quality of product. This kind of feedback can always help to improve the business and help make it better.
Magnolia Bakery will need to implement a pricing strategy when launching its new delivery service. Magnolia should consider how much consumers, specifically in its target market segments, will be willing to spend for the value this service provides. Since this new service being offered gives Magnolia the capability to reach a greater number of customers, management should focus its strategy on attracting these new customers. This means Magnolia Bakery should take a sales-oriented approach to its pricing strategy, meaning a strategy with a goal of increasing sales by getting customers “in the door.” There are a couple of different ways this can be done. Magnolia could provide incentives for customers to start using its service through a limited time introductory offer, such as free delivery for the first 30 days. Magnolia could also offer discounts to existing customers in exchange for bringing in business from a friend, providing them with an incentive. Once it establishes a customer base, Magnolia will also want to look at maximizing its profits. Prices for the product should match in-store prices, as the costs of producing the product are not affected by the distribution method, with the exception of volume discounts.
The increased costs come from transporting the goods to the customer. There should be some charge for the convenience of the delivery service to offset costs, but this charge should not be so high that it discourages customers from using the service. A reasonable starting point would be $10 per week, with distance from the store as a consideration. Magnolia should also consider that higher volume orders bring in more profit. An offer of no delivery charge for orders over $50 dollars per week, for example, may encourage larger orders. However, not everyone in Magnolia’s target market segments has an income that would be sufficient for them to take advantage of volume discounts. Senior citizens are a group that would find the service useful, but would be more encouraged to use it if Magnolia offered a senior discount or sent out coupons in the mail. Finally, Magnolia will need to factor in competition with regard to its pricing, as there are others who could offer the service as well. Too high of a price compared to competitors would reduce sales, while too low of a price could start a price war.
In the four “P’s” of marketing, placement is a very important element in the marketing strategy. Multiple distribution channels will aid Magnolia Bakery in expanding our reach and also grow revenue from the sale of the bakery’s fresh bread and other products. Offering direct delivery in the neighborhoods of our shops will continue with our focus of personalized service to loyal customers. Building distribution channels using local retail grocers and specialty markets will allow us to sell through value added resellers (VAR). Members of our sales team have already contacted several wine and gift related boutiques that have an interest in Magnolia Bakery’s breads and desserts, to include in gift baskets and special picnic baskets. When working with value added resellers such as these shops specializing in food baskets, we will be able to work together to find the right products to complement the others goods joined in the baskets.
While considering all distribution channels, including those of our value added resellers, we need to know that we will meet the needs of consumers. Our bakeries and production plants will need to be able to handle the increase of sales and that of certain products during times of peak demand. The value added resellers will be the places where our customers will be coming in contact with our goods and we will need to be able to deliver to the VAR to complete the delivery channel. Our level of service will play an important role and we must do it in ways that are preferred by customers. How we deliver our baked goods to our customers is just as important as the products themselves. We need to supply the right products at the right times, to the right places. Whether we are using a direct distribution channel delivering products through our stores to customers, or through value added resellers, we must have consistently quality products every time.
There are still a lot of questions to answer and decisions to make from the concept of an idea to introducing the product to the customer. Before launching the fresh baked bread to the customer, Magnolia Bakery has to check that everything is in position so it goes efficiently. What if one of these questions, not answered, or a decision made before the release of the product causes dissatisfaction? The product may not reach expected sales goals. Many aspects play into the success of the final product and whether if fails or thrives. The product, pricing, placement, and promotions, as well as the channels in which Magnolia Bakery is delivered are important parts of launching any new product.
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