Business Studies Paper on Pink Lady Apple Orchard

Pink Lady Apple Orchard

Introduction

The business environment requires an understanding of the market dynamics and effective marketing towards the right market segment for success to be achieved. In the case under consideration, the need for these two features of business management comes out perfectly, based on the market characteristics. The apple growing and sales industry appears to be over saturated. As a consequence, the players in the industry have to be innovative towards getting new products in the market and also marketing existing products. The approach of choice according to Jacinta and Pete is to develop a variety of apple products and to market those as the new product lines rather than selling apples directly from the farm. As a marketing strategy, the two have implemented various softwares and the social media as marketing platforms. The challenge therefore, is in identifying the purchasing trends of the customers for effective planning of marketing practices. The ensuing report describes the findings that can be deduced from the couple’s marketing activities and recommendations for best approaches towards future performance efficiency.

Discussion

The main objective of the business owners at Pink Lady Apple Orchard is to determine the best selling brands, which will also be an indication of how much they need to produce in order to ensure that their products meet the market demand. In inventory management, it is recommended that production volumes should be at par with the customer demands. The chart below gives a general overview of the cumulative sales for each of the brands that are currently being marketed by the company. The chart can help in explaining the purchasing behaviors of customers and planning for future productions.

Figure 1: Total revenue from each product

From the chart above, it is observable that the Classic Cider Vinegar product helped the company to earn the largest revenue amount in the three months from January to early April. The lowest earning brand was the Mixed Cider pack. The total earnings for the highest earner amounted to approximately $ 11,000 while the lowest earner had slightly more than $ 2,200. This can be an indication to the company, the order in which they should be producing their various products. It could also be an indication of how they should plan their marketing activities and the markets they should focus on more than the others. Low revenue from a given product stream could have multiple implications and the company should focus on determining the actual problem with the brands. Similarly, high revenue from a product could have multiple implications. The decision to produce a particular product in higher volumes than another should therefore be dependent on a variety of factors besides the revenue obtained from each product stream. In the chart below, the per unit prices of each of the products is shown.

Figure 2: Retail and wholesale prices for different products

The pricing chart above shows the retail prices for classic apple cider, dry cider, mixed cider pack and the sweet cider products at the highest level. The least retail price corresponds to apple cider vinegar. Similarly, the wholesale prices for the apple cider vinegar, classic apple cider, dry cider, mixed cider pack and the sweet cider are highest while the apple cider vinegar is lowest. What this means is that the company has to note the impacts of pricing on product purchase before making the decision to produce or not to produce more of a given product. For instance, figure 1 showed that the classic cider vinegar earned the highest revenue while the apple cider vinegar and the mixed cider pack had the lowest revenues. The conclusion that can be drawn from these outcomes is that the purchase of classic apple cider could have been purely as a result of customer preference since the revenue was not impacted negatively by the high price. Similarly, customer decision to purchase apple cider vinegar was also a factor of personal preference. However, to ascertain these two findings, it would be important to look at the number of units purchased for each of the products. The chart below shows the total sales per product.

The chart for unit sales made shows that the highest units for classic cider vinegar. Mixed cider pack showed the lowest volume of sales with regards to the number of units sold. There are many factors that can determine the purchase rates for a given product and also the total revenue from that product. For instance, the total revenue from a high cost products can be high if fewer units are sold while the total revenue from a low cost products can only be high if the units sold are also many. In the case under consideration, the apple cider vinegar is the least cost product among the company’s products. As such, it is expected that for it to have total revenue matching those of a high cost product such as the classic apple cider, it has to sell higher number of units than that product. The chart below however shows that the highest volume of sales in terms of units was recorded by classic cider vinegar. The lowest volume was recorded by the mixed cider pack. The decision to produce more should therefore focus on the classic cider vinegar as it has been established that customer purchase trends are based on preferences for the same.

Figure 3: Total unit sales per product

Another factor that confirms that customer preference determined the sales levels is marketing outcomes. According to the business owner’s plans, the customers who placed orders based on marketing sites obtained discounts. The chart below indicates the ratio of discounted versus undiscounted sales which means that more customers made purchases without the advertisements compared to those who were influenced by adverts.

Figure 4: Discounted versus un-discounted sales

Conclusion

The decision to produce a given product should be dependent on the demand for that particular product in the market. At Pink Lady Apple Orchard, it has been shown that the customer purchase trends are based purely on customer preferences. For instance, products that are high cost still gain high revenue through the sale of more units of the product. Similarly, some products that are relatively low cost still sell fewer units to gain lower cumulative revenue. As such, the company should work on approaches to meet customer demands without incurring extra costs.

Recommendation

For Pink Lady Apple Orchard to benefit from the apples in terms of revenue, the company should focus on strategies that minimize costs and increase the marginal profits. Reducing inventory costs through effective production planning can help the company to gain more market shares for its products. The best approach for the company would be to use a demand curve and calculate the discrepancy between the marginal costs and the marginal revenue for each of the products. The production limits should be set at the point where the marginal costs match the marginal revenues as that would be the point where the market demands are met satisfactorily. In terms of advertising, the company could focus on approaches that encourage diversification of marketing methods to reach different target markets. Although the shopping deal sites can offer an effective opportunity for gaining access to some customers, most of the local customers targeted by the company would most likely find information from the social media.