Price
A price needs to be calculated. I need to charge the maximum amount that the average customer is prepared to pay.
The two basic components that will affect my product pricing are costs of manufacture and competition in selling. It would be unprofitable to sell food below the manufacturer’s production costs and unfeasible to sell it at a price higher than that at which comparable food is being offered at cafes such as The Best Blend. Discounts may be offered on purchases in quantity.
I could use premium pricing and charge a high price initially, but for this to be successful there has to be a uniqueness about the product or service. This approach can only be used where a substantial competitive advantage exists. Such high prices are charged for luxuries and this is therefore not a suitable strategy for Notons.
Another possibility is penetration pricing. The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by businesses in order to attract new clients. This is unsuitable. I feel I cannot afford to charge low prices at start up due to high costs.
Cost plus pricing involves adding up all the costs of making the product and then adding on an amount for profit. Using this method I have calculated a suitable price to charge. £8.99 for a meal seems an appropriate price.
My competitors charge around £5-6 for a meal. My prices will be fairly competitive. But with a reputation for quality being built upon, consumers will be prepared to pay a little extra to dine at Notons.
Research showed most people tend to spend no more than £30 per head. At Notons the typical person should spend around £20 including main course, dessert, drinks and tips.
Promotion
I need to target the age segment that is willing to spend the most. Thus the core target market should be aged 21 to 30. If the business is a success more expensive advertising methods can be used to reach a widespread audience. The month-by-month promotion strategy of the first year illustrates the promotion approach.
Advertising, personal (face-to-face) selling, and sales promotion are the methods I could use to induce people to dine at Notons.
The primary objective of Notons advertising will be to pre-sell the food and drink—that is, to convince consumers to purchase a burger and a coffee before they actually see and inspect it. I consider this function important and will allocate extensive budgets and may eventually engage specialist advertising agencies to develop Notons programme of advertising. By repeatedly exposing the consumer to the Notons brand name, to the appearance and the unique features of the cafe, we hope to incline consumers towards Notons food. Advertising will not be done on television, cinema or magazines as these are very expensive methods. We will use billboards or other large displays; local newspapers and through direct mail to consumers.
Café staff will be trained so that they have knowledge of the manufacturer’s products. Sales promotion will involve special merchandising inducements such as discount coupons, contests, a premium (gift) with the purchase of a product, or a lower price on the purchase of a more food.
Place
The place where you put your shop is important as this affects how you get your product to your customers. When looking for a place for my cafe these facts will be considered:
- Competition
- Parking
- It must be in a area where the income is around £15000+ (for my shop)
From my research have found that a certain area of Wetherby meets the criteria as the majority of the inhabits are in group B. Moreover there is modest competition and easy access to the area.
I will locate my business in the popular LS22 area of Wetherby, in the busy town centre. It should gain plenty of public attention and although it is near competitors the active lifestyle surrounding it makes up for this. The cost of this property is £315,000.
This is an outstanding location in a highly desirable residential/tourist town. It is close to the Yorkshire Moors, conveniently situated near major tourist attractions. This property has 2/3 bedrooms dependent on use of living rooms. This has been a quality trading area for years and the establishment is very well equipped.The current business is showing good profits from relatively short trading hours.
The place that I have chosen has more advantages then disadvantages. My restaurant will be near a main road which will allow people to see any promotions and they will be drawn to the area by the large nearby supermarket. Since there is a large supermarket near by there is bus stop opposite which improves access to my cafe. Another major advantage is that there is bank in close proximity that has a cash point making it easy to withdraw ready money. There are some disadvantages primarily that there is no dedicated car park, and that there are parking restrictions. The main parking restrictions are that there is no parking on certain points between 8 PM and 6 PM Monday - Friday. The planning restrictions in the local area are not very strict so this will help if I want to make changes to my business. There are very few social costs, but there are also few benefits. The major benefit of placing the restaurant in my chosen place is that this would bring people into the local area to dine. This could complement other local businesses.
To summarize, the building selection has been chosen based upon the following list of criteria:
- Community size minimum of 40,000 people within five miles.
- High visibility.
- Easy access to parking lot with a minimum of 120 parking spaces.
- Mid- to low-cost land
- Heavy blue-collar worker makeup in the community.
- No overabundance of competition in the trade area.
All of these qualities are consistent with Notons goal of providing a top quality, entertaining dining experience at an unbelievably low price. We want "word of mouth" to be our best form of marketing, where our guests cannot believe the value of their dining experience and can't wait to tell their friends and neighbours.
