8/12/2019 Vora Case Group 9

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Vora andcompany Case

Submitted by:

Utkarsh Kumar Singh (221156)Shambhvi Singh(221132) Vidur Chutani(221165)Siddharth Kohli(221142)Sumanto Banerjee(221151) Abhishek Jain (221175)

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Pricing strategy Evaluation adopted byMr. Vora

Mr. Vora adopted a geographical based pricingstrategy.

The company received 20% less of the list pricein sales from its product.

10% of trade discount was given to the retailersand another 10% to the agents as commission.

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Cost per Case of Blossom Oats

Type Amount(Rs)

Material 24.12Packaging tins 21.60

Other packagingmaterials

4

Direct Labour 5.40

Railway Freight 4.80

Total 59.92

Direct Costs Overhead Cost

Type Amount(Rs)

Rent 165Electricity and water

50

Coal 50

Depreciation 500

Interest on working capital

250

Others 1015

Total 2030

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Cost per Case of Blossom Oats Total overhead cost per case for 500 cases is Rs

12.18 . Hence total cost per case=Direct cost+

Overheads cost=Rs 72.1

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Pricing strategy evaluation List price of a case by Mr. Voras company=Rs

81( In North India) Commission of agents=10% of 81=Rs 8.1 Trade discount of retailer=10% of 81=Rs 8.1 Net selling price per case=Rs 64.8

Total Cost per case=Rs 72.1 Hence net loss per case=72.1-64.8=Rs 7.3

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Pricing strategy evaluation continued.. In comparison we see one case of Champion

Oats list price=Rs 93. After 7.5 % commission & 7.5 % trade discounts

net selling price per case of Champion Oats=Rs79.05

Hence we can conclude that Mr. Vora couldincrease the price per case of Blossom Oats up toRs 92.In this way he can earn some profit innorth India by offering a lower price thanChampion Oats.

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Factors to be considered for pricing

The aim: Maximising profit

Maximising market share Demand The type of consumers (price sensitive or not) Approximate cost of production Competitor Geographic location Commission of agents and sub agents

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Recommend a pricing strategy to

improve the marketing performance Price sensitivity is less as there is only one

competitor. Champion Oats price was higher than Blossom

oats which implies that customers perceived value of Champion oats is more than Blossomoats.

So Blossom oats can increase their price but atthe same time and at the same time increasetheir advertising expenditure as well as appointan experienced distributors.

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Mr. Vora should go for geographicalbased pricing

This will help him to provide different rates to wholesalers and other specific types of customers such ashotels etc.

The company should focus on different pricing strategyfor areas where the business is struggling.

The oats have higher acceptance in southern India so thecompany can afford to adopt different pricing.

The company is based in Lucknow so they have to

consider the additional costs incurred due to shipping. The company needs to spend to set up a robustdistribution channel to establish its brand in the regions where the brand is struggling. For this reason the pricingstrategy may have to vary

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Thank You!!