Pricing Strategy

Pricing Strategy

Pricing Strategy and Channel Distribution Pricing Strategy and Channel Distribution Determine and discuss a pricing strategy (Penetration or Skimming). The pricing strategy for Crystal Light Kicks will eventually be in line with current pricing of other Crystal Light products as the Crystal Light brand is already in existence. Current Crystal Light pricing is at a suggested retail price of $2. 56 oz for a 1. 4 oz package ($3. 54) that includes 10 on the go packets and $1. 25 oz for a 3. oz canister which can make a 12 quart pitcher ($4. 00) according to Pea Pod by Giant supermarket (Peapod. com). The initial pricing strategy for Crystal Light Kicks will take a penetration pricing strategy to introduce the product to assist in dispersing the brand quickly and widely throughout the new market segment. Since the target market is children ages 5-16, the strategy is to employ parents who drink the existing Crystal Light product to purchase the product for their children.

Crystal Light Kicks will offer its new product at a suggested retail price of $2. 31 oz for the same size package as the regular 10 count on the go packets ($3. 23). For the canisters, Crystal Light will take on a true penetration pricing strategy by offering the 10 oz canister for $. 50 oz and will be sold at the same supermarkets offering the existing product line. Kraft Brands and Crystal Light will take the penetration approach to help capture a large segment of their target market (children ages 5-16).

Since the product line will include round shaped canisters with a scooper to stay in line with other products marketed to children like Kool-Aid it will be important to remain competitive with their pricing. According to Pea Pod by Giant supermarket, Kook Aid 19 oz cans are priced at $0. 18 an oz coming out to $3. 42. Kool Aid may offer a larger size canister but Crystal Light requires less scoopes to make a pitcher. Skimming is not an option for the new Crystal Light Kicks brand as its introduction is more about volume than profit margin.

The price over time will be raised to be in line with the existing product line as the product reaches maturity and secures its segment with added features and flavors that the customers will want. Determine and discuss pricing tactics (Product line pricing, Value pricing, Differential pricing, or Competing against private brands) to be used for your product. Identify any legal and ethical issues related to the pricing tactics. We see no legal or ethical issues relating to the pricing tactics used with our products.

The product pricing is in line with current products marketing to our segment and we will not employ any price discrimination with our products. The Crystal Light Kicks product will be offered in bulk in supermarkets and wholesale retailers like Costco and BJ’s and will follow all ethical and legal guidelines that are in line with other Kraft Brands and Crystal Light products sold at these retailers. Consumers are offered discounts on Crystal Light products through purchase of a membership card that will be accessible to all consumers consistent with the guidelines of the wholesale retailer.

Prepare a marketing distribution channel analysis identifying the wholesaler, distributor, and retailer relationships. The Illustration above reflects the marketing distribution channel that will be used to get Crystal Light Kicks out to the consumers. The manufacturer is Crystal Light/Crystal Light Kicks. The wholesale and retailers are the supermarket chains that will house the product which will include stores like BJ’s, Giant supermarket, Safeway supermarket, convenience stores, drug store chains and other markets that would sell beverages.

The last part of the channel is the consumer. In the case of Crystal Light Kicks the consumer would be the parent and/or children with purchasing power that are able to purchase our products on their own. The number of links in my marketing distribution channel is three. Discuss how the distribution strategy fits the product/service, target market, and overall marketing objectives for the company. The manufacturer is Crystal Light and the process will begin with them. The manufacturer is the first step in the marketing distribution channel analysis.

They are responsible for making the product, promoting, pricing and any other financial related duties related to getting the product to the retailer/wholesale chain. The manufacturer will also take care of the primary marketing and advertising responsibilities to make consumers aware that the product exists through the existing Crystal Light website, television and paper advertisements. The product is shipped directly to the wholesale or retail chain that will display and store the products. The retail and wholesale shops will also participate in some level of advertising for the product.

Individual supermarkets and wholesale chains such as BJ’s and Costco have weekly circulars that feature certain products and Crystal Light Kicks will be advertised in these circulars in line with the promotions available for the product. The last step is getting the product out to the consumers. The retail and wholesale chains will stock the marketplace with our goods and provide consumers with a means to purchase Crystal Light Kicks. The distribution strategy is a basic strategy to provide Crystal Light Kicks to our target market segment.

Crystal Light Kicks is considered consumer package goods and will be distributed intensively as opposed to selectively. There is no special need for a “middle man” or sales team to explain the product. In this case, the product is simple, inexpensive and can be easily transported to the retail level. References Crystal Light. Retrieved from: http://www. peapod. com/site_frameset. jhtml? NUM1=1321233879572 Crystal Light. (2010) Find Your Flavor. Retrieved from: http://www. kraftbrands. com/crystallight/Pages/default. aspx#/home Crystal Light. (n. d. ) Retrieved from: http://en. wikipedia. rg/wiki/Crystal_Light Hazen, Cindy (June 8, 2007). Flavors for Kids. Retrieved from: http://www. foodproductdesign. com/articles/2007/06/flavors-for-kids. aspx Kids Logos Blog (August 21, 2011). Retrieved from: http://kidslogos. blogspot. com/2011/08/important-areas-to-focus-on-while. html Kraft Foods Fact Sheet. (2010). Retrieved from: http://www. kraftfoodscompany. com/assets/pdf/kraft_foods_fact_sheet. pdf Kraft Foods Announces New Global Organizational Structure. (January 8, 2004). Retrieved from http://www. kraftfoodscompany. com ———————– Manufacturer Consumer Wholesaler & Retailer