What is the nature of the product and its

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Microeconomics: A Contemporary Introduction
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Chapter 3 / Exercise 4
Microeconomics: A Contemporary Introduction
McEachern
Expert Verified
1. What is the nature of the product and its characteristics? 2. What is the nature of the competitive environment?3.Because of the newness of the product, the promotion and advertising will be essential at start-up.Analyze the market strategy in terms of sufficiency for a new product. 4. What problems might be anticipated with the product? How could these problems be minimized? 5. What are the strengths and weaknesses of management and the organizational plan?6.Analyze financial projections for start-up expenses and capital equipment.SOLUTIONS TO QUESTIONS FOR DISCUSSION 1.What is the nature of the product and its characteristics? In this case the “product” is both tangible and intangible. The food itself is the tangible element; intangibles include the preparation of the menus, packaging of the food, cooking instructions, and deliv-ery service.Product development is not long, technical risk is low, and Gourmet To Go (GTG) is not ex-tremely capital intensive. Inventory can be kept at a minimum until orders are actually received, and menu planning will help keep only necessary food items in the warehouse. Market surveys indicate that customers are willing to pay premium grocery prices plus a mark-up for delivery and menu design. 2.What is the nature of the competitive environment? Case IIC: Gourmet to Go208Entrepreneurship
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The document you are viewing contains questions related to this textbook.
Microeconomics: A Contemporary Introduction
The document you are viewing contains questions related to this textbook.
Chapter 3 / Exercise 4
Microeconomics: A Contemporary Introduction
McEachern
Expert Verified
The last twenty years have seen stagnant growth in the U.S. food market; it is now considered a mature market. There are environmental forces, however, creating a marketing opportunity for the entre-preneur. Demographic changes have hit the baby boomers. Born between 1945 and 1964, this enormous market comprises 27 percent of the total population. Health conscious buying habits identify this seg-ment, as does the high percentage of two-income families. Although current consumption is higher for food away from home than food at home, increased disposable income and boredom with traditional take-out foods have led to new products and services in the food industry.Demand for lower calorie, lower salt, lower fat, and more nutritious foods that are easy to preparehas caused eating and purchasing habits to change, bolstering sales in what is a low (population) growth market. Fresh foods and vegetables and the home-cooked taste of delicatessen items are perceived as more wholesome, and are replacing the “freezer case phenomenon” of the earlier markets..The perception of a differential advantage over fast food/do-it-yourself shopping is present for young urban professionals with limited leisure time and high disposable income. There are 16,600 house-holds in Tulsa that have an income of $65,000 or more; this number is expected to rise to 18,000 by the end of year 3. Even at the end of year three, a 2.2 percent market penetration is all that is required to makeprojected sales. GTG has a niche in this up-scale market.Case Exhibit IIC-1Currently, there is little competition: grocery stores, carry-out restaurants, and delivery services such as Schwann’s comprise the prepared-at-home food industry. There is no direct competitor for this service at this time in Tulsa. But GTG’s service is not protectable; should a well-entrenched competitor such as Schwann’s choose to do so, they could replicate Jones’s services. Schwann’s currently has name

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