Pricing
Discuss about the Foodora for Strategy of Penetration Pricing.
The pricing strategy plays a key role in the marketing mix and acts as a most relevant mix belonging to the Marketing Mix strategy of an organization. Hence, the pricing strategy of an organization should be such that it can enable the firm to compete with its competitors and also ensure that the firm is successfully able to gain a relatively largely share in the chosen market. Therefore, a proper pricing strategy needs to be followed by the organization which matches their competency from the competitors and seems convenient to the customers as well. Therefore, the pricing strategy which can be fairly adopted for the firm Foodora is the strategy of penetration pricing.
The penetration pricing strategy is a strategy which is used effectively to shut down the potential competition which takes place. The given strategy becomes very difficult to follow in the existing market but this cannot be the case but when a new market is being exploited, the company can conduct effective researchers and utilize resources to make the prices being offered as low as possible. Very often raising prices later, becomes a problem. The primary goal of the given strategy is to attract the customers and this can discourage competition in the long run.
Foodora can use this strategy in the new markets and hence, gain advantage of the first mover’s advantage. Other competitors will fear entering the market and thus, it will be an appropriate strategy when the firm ants to overcome international competing. The company however needs to ensure that they have enough resources and man power to deal with the given scenario.
The promotional aspect of the promotion mix strategy also tends to play a huge role in determining the success of a company in market. However the use of the promotional strategy is quite relative to the country in which the business is planning to expand and invest in. There are different promotional channels available for a company however, the best strategy for the use of Foodora will be to use sales promotion as a mix. This is because sales promotion involves a wide range of strategies which go a long way in helping an organization to achieve the desired response from the market.
The different types of sales promotion techniques which can be adopted by the company can be offering huge discounts on initial purchases, gifting offers for first time users, offering coupons with offers like buy one and getting another free, sampling contests and bundling.
Promotion
A business organization has various avenues which can be used by them in order to ensure that they are able to conduct primary research. The primary reason to carry out a primary research is to be able to understand the different needs of the customers and ensure effectiveness. This can also come in the form of the different organizations being able to take up ideas for new products and design processes. The different primary research methods which can be adopted by Foodora are as follows:
Interviews- the Company can take up interviews from different people coming up from different backgrounds in order to understand their point of view and to be able to figure out the primary reason behind the different needs, demands and the behavior of the target market. The different consumers may be given certain incentives to be able to attend these interviews so that they can give their time. The interviews serve as a detailed method of research and the responses reviewed can be utilized effectively.
Questionnaires/Surveys- The questionnaires and surveys are a cost effective method of collecting information about the demands of the different customers. This is because, the questionnaire can be simply sent to the customer and they can again be provided a discount or submission and other related offers. The questionnaires which will be used by Foodora can be open ended or closed ended and different aspects can be figured out.
Observations- Observations take place when the marketers tend to observe and track the pattern which is being followed by the customers. The customers in case of the Foodora business can be observed by tracking their daily purchases, the price in which they can fit their budget and their other needs. When the observations take place closely various aspects of the target market can be reached out to.
Focus groups- The different consumers can be called up for a discussion amongst themselves and their arguments or interactions amongst one another based on the purchases can be observed and a conclusion can be reached.
It is important that Foodora uses these methods keeping in mind the cost effectiveness of the method and its efficiency in predicting the behavior of the consumers.
The case study reflected that Foodora is facing a problem with respect to the high turnover of the different employees. The company needs to ensure that the turnover rate is kept at low as this will permit the firm from performing reasonably well. Employees generally look out for different benefits when they are working for the long term of the organization and thus for this reason they need to be provided with certain motivational factors. The motivational factors can be either Financial or non-financial in nature. For this purpose, the method which can be adopted by Foodora to motivate its employees has been discussed below:
Primary Research
Financial motivation comes in the form of providing monetary benefits to the different customers. These include benefits like wages, salary, Fringe benefits and share ownership. The method which will be best suited for the Foodora Company will be the Fringe benefits. The fringe benefits can be described as an extra benefit supplementation which can be provided to the different employees in order to motivate them. This can be providing them with car, health care, housing, education, food and travel allowances.
In the given scenario, Foodora can provide its employees with:
- Vehicle
- Health benefit
- Travel allowance
- Food allowance
These allowances are the needs of the employees and often go way higher in impressing them other than the basic wage being offered. If the employees are provided with these benefits, they will be willing to work for a longer time in the firm and it can improve the falling turnover rate.
Non-financial Motivation
The motivation aspects can be non-financial as well. The non-financial motivational aspects include providing the different employees with job enlargement, rotation, enrichment and empowerment opportunities. These opportunities often tend to attract the employees more than the financial aspects and thus form an integral ingredient to successful employee relationships.
Foodora can follow the method of job enrichment to its different employees. By following the given method, the company can ensure it is providing a lifetime experience to the different employees which will assure long term sustenance. This enrichment can be provided by providing them with decision making powers, appraisals, credits and recognitions.
Market segmentation forms an essential aspect for any business as it goes a long way in helping the company to remain focused towards its different aspects and outlooks. Hence, every firm including the Foodora Company needs to have a specific segment with respect to the different dimensions. The following can be analyzed.
Geographic- The geographic segmentation is largely done based on the location of the consumers. The different components of this kind of segmentation are locations, regions, urban and rural locations. The company needs to ensure that it chooses the right kind of marketing segmentation to gain maximum advantage. Foodora with respect to this aspect can go for the urban location. As the company deals with the delivery services of the fine dine restaurants, targeting the urban population would be considered effective.
Demographic- The demographic segmentation tends to look out for the different characteristics of the customers such as their age, gender, occupation and the socio economic group. This segmentation basis is often considered to be the most effective aspect which contributes to helping the different customers to decide upon the kind of customers they would like to serve. In this aspect, Foodora should be serving the population which is aged above to and below 50, belong to the upper strata of the economy and social background and tend to enjoy a good lifestyle. If this is possible, only then they will be able to purchase from the upscale restaurants.
Psychographics- This segment targets the thinking and perception of the different customers. It includes factors like the lifestyles, personality, attitude and class. It is important to market the products to the class which is most suited. Foodora can target the psychographic group who enjoy a luxurious lifestyle, have a grand personality and prefer eating fine food along with belonging or connections to the upper strata class. This is because Foodora concentrates on the upscale restaurants and hence, in practical sense, a richer audience is necessary.
Behavioral -The last market segmentation is based on the behavioral aspects of the customers. They include the customers who seek benefit out of the products, their loyalty status, rate of usage and willingness to purchase. In this aspect, Foodora can target customers who seek taste and quality out of the product and services, tend to order food very often and are willing to purchase food from the upscale restaurants.
The choice of the correct segments contribute to a sustainable competitive advantage.
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