Question

Can someone provide me a feedback on the discussion post below. This is a marketing management class. Thanks

Company: Corral de Tierra Market

Size: Small, single counter convenience store

Number of locations: 1

What is the company’s pricing objective?

The company’s pricing objective is product-quality leadership. As Kotler and Keller (2016) state that, “many brands strive to be the “affordable luxuries” – products or services characterized by high levels of perceived quality, taste, and status, with a price just high enough not to be out of consumers’ reach” (p. 469). This is what Corral de Tierra Market strives to be. Corral de Tierra Market is essentially a convenience store market, but it is different than other convenience store models in the area for a few reasons. They offer higher end options in regards to wine selection and cheeses. They also offer chef made fresh delights for you to bring home for dinner in a grab and go style for busy weeknight dinners.

How sensitive are the company’s target customers to changes in price?

Because this business model is a convenience store model, it does have the target customers who are not there to get a deal or comparison shop. It is simply a mode of convenience. Because of that, it is apparent that the company’s target customers have a lower sensitivity to price changes. But, as the owner told me, “no matter what, you can’t make everyone happy all of the time.”

Do they have some target segments that are less price sensitive than others?

They definitely have some target segments that are less price sensitive than others. The customers that are interested in wines and cheeses are less interested in the price rather than having the availability of selection in an area when there is not very much to choose from. In regards to the take and go food, when these items increase in price it is a subject of unhappiness from customers sometimes. It is interesting to see that some items have this price sensitivity.

How much consideration does the company give to competitors’ prices when setting their own?

Corral de Tierra Market gives moderate consideration to competitors’ prices when settling their own prices. It is important to not have an outrageous gap between their pricing in comparison with the competition. But, again there is no other store that has a similar business model within 15-30 miles from them, giving them the upper hand when pricing.

What method of pricing do they use to arrive at the final price for the customer?

This was difficult to listen for without directly explaining what I was looking for. But, after having the owner explain how they did things for a bit, I came to the conclusion that they use target-return pricing. Kotler and Keller (2016) describe, “in target-return pricing, the firm determines the price that yields its target rate of return on investment” (p. 476). As with any small business, the return on investment is absolutely essential to its success. The owner re-evaluates pricing each year and adjusts to be sure he stays within a specific percentage range.

Answer 1

Feedback on discussion post:

The article provides information about corral de Tierra market, a small single counter convenience store, the pricing objective, target markets, target segments, method of pricing, and competitors price.

The pricing objective stated here is product quality leadership. Since it is a small store, the company must first have its objective of getting a decent market, meet with its large competitors. The company could have set this objective as any small stores would first involve in getting sufficient market competition, face the challengers of big stores and can later focus on leadership.

The article says customers are less sensitive to price changes. I don’t think so this is possible. The customers can switch over if a reputed brand than corral de tierra can offer the same product with even more less price or if the customers would prefer big stores, in which case they don’t mind paying even high price as reputation stands first.

It is essential for the company to always give maximum importance to competitor’s price. Here this store gives only a moderate consideration, which is not considered to be good. Any business for that matter can sustain and win in the market only if it is aware of its competitor’s actions.