Restaurant Distribution & Pricing

In order to make it in business, companies need to have a solid and suitable marketing plan. One of the key elements associated with a marketing plan is distribution and pricing. Companies have to integrate these components within the marketing plan to successfully and effectively become a viable player within all sectors including the hospitality industry.

Distribution

The most effective method for getting the food products/services to the small town is through exclusive distribution. According to Lamb, Hair, and McDaniel (2013), exclusive distribution is for a specialty goods and/or service. For the family style restaurant, this will be the most effective and efficient use of distribution channels to their target market segment, which presently appears to solely be the small town where they are. Their desire is to recoup their loss in revenue immediately. In this particular case, the family style restaurant needs to ensure that they are in constant contact with merchant wholesalers in order to keep their product viable. They will need to employ logistical, facilitating and transactional functions with their merchant wholesalers as far as the movement of the products that they will be selling to the consumers.

Pricing

The immediate pricing goal is to keep the current pricing range. In the future after sales are recouped, the pricing goal will be to raise prices in accordance with the fact that the restaurant is the only home style one in a 20 mile radius. In this case, there needs to be value pricing, which is defined as "a business pursuing pricing [that] seeks to set prices based on what consumers are willing to pay" (Hamel, 2013). This ensures that consumers feel that they are getting value for their money by patronizing the restaurant and that restaurant gains a significant understanding of the preferences of their consumers. On the basis of what is presented in the case study, pricing will be as follows:

(Table omitted for preview. Available via download)

When comparing it to Coco's Bakery, which is a similar style of restaurant, prices are comparable. Prices are higher on dessert as to accommodate for recouping the revenue loss. For example, Coco's charges $10.99 for a pie, while the restaurant will be charging anywhere between $10 - $15 per pie. The rationale here is to make sure that the losses in revenue due to lack of a workable marketing plan can be recovered to a certain extent. All other products are equivalent to Coco’s Bakery pricing.

Website Sales

The products sold online would be the pies only, but consumers would be able to place orders online. The pies would incur a $5 - $10 surcharge for processing. This would be needed to recoup costs associated with shipping and packaging. The restaurant would employ social media marketing as this is the most practicable methodology in terms of gaining followers to 1) purchase online and 2) frequent the restaurant more than the fast-food chains.

Alternate Sales Venues/Price

Aligning with the purpose of profitability scaling, there would be no reason to change the price of the pies if sold to a convenience store because profit would need to be made. Although the distribution channel would be different, that does not change the pricing strategy. Moreover, at a food fair or on eBay, the pricing strategy may need to be changed to the price that the pies are at the restaurant themselves. The value strategy would again be employed here to make the customer feel as if they are receiving a 'bang for their buck.'

Conclusion

There is reason to believe that by incorporating a value pricing strategy that the restaurant will gain notoriety, which is what they are seeking in addition to gaining revenue. This will be the initial focus and then once they are more established, and consumers begin patronizing them more frequently, an adjustment in strategy will undoubtedly be needed. 

References

Hamel, G. (2013). Different types of pricing strategy. Gannett. Retrieved from http://yourbusiness.azcentral.com/different-types-pricing-strategy-3863.html

Lamb, C., Hair, J., & McDaniel, C. (2013). Marketing. Mason, OH: South-Western.