Old Town White Coffee, India

Old Town White Coffee, India

UBMB3013 International Business Page 11

The raw material such as coffee beans and tea will be bought from local Indian farmersin order to support the local agricultural economy, save money in transportation and tariffs, andgain tax benefits. Of course, an inspection of the crops is very important in which this processwill ensure that the high quality coffee beans to be selected and used in the daily operation andfurther generate better brand image. These coffee beans will then be transported to the OTWCroasting plant located near the New Dehli location and then transported to Mumbai through avast and efficient railway system. The equipment and other necessary supplies will be shippedfrom Malaysia keeping in mind there is a tariff on all these items. The inventory policy is tokeep the stores stocked but not overstocked to ensure freshness of products. Thus, better gauges of the numerical figures in the inventory policies should be made after observingconsumer trends.

Pricing Strategy

Price is the amount of the money customers have to pay to obtain the product. Thevalue that received from the product must be highest than the value that customers pay for exchange its goods and services. Pricing strategies usually change as the product passesthrough its life cycle (Kotler & Armstrong, 2006). For a each stage of the life cycle, the pricestrategy might be different. Skimming pricing will be taken place in the early stages at theearly stage of product life cycle in order to gain necessary cash flow. Later on, competitive pricing will be implemented for the success of the venture in order to gain competitiveadvantages and market shares. Of course, promotional pricing strategy, meaning temporary price reduction will be given in certain festivals or events to build patronage and store traffic.Used effectively, it can also stimulate consumer demand.The costs of production must also take into consideration because it involve the start-upcapital, transportation cost, and imported goods. Thus, the star-up price will be set at aboutRM 3.70 per drink using the concept of zone pricing to make the coffee affordable to the targetaudience. Exchanges will be done in rupees so that would be about Rs 55. With using the promotional pricing strategy, OTWC prices will be 20% lower than those existing localcompetitors such as Barrista Coffee Company. The use of these pricing will ease thecompany¶s slide into the market place. Although, it is possible to get a cup of coffee for merelyRs 5 at small stalls on the street. However, with a popular multinational b