7.1.2.1 Cost-based pricing strategy The first step, when Trung Nguyen brings filter coffee products to the Korean market, the enterprise
will apply a cost-based pricing method: Trung Nguyen will estimate the cost to produce powdered
products filter coffee. Then, the enterprise will add the cost with the profit to form the official price
of the product.
Here's how to calculate Trung Nguyen's expected price for filter coffee:
1 Trung Nguyen filter coffee product = 500g
AVC = 6000 Won / product corresponding to 100g = 3000 Won
TFC = 1.2 million Won
Q = 120,000 products
Desired profit of the corporation: 20% (above costs)
Retailer profit: 16.5% (on cost).
AC = AVC + TFC/Q = 6100 Won/product
Selling price of business
P = AC . (1 + 0.2 ) = 7320 Won/product
Retailer's price:
P = 73220 . (1+ 0.165) = 8527.8 Won/product
After the price of the product is available, Trung Nguyen will use marketing measures to prove to
consumers that the price of filter coffee powder is reasonable. With the value that Trung Nguyen
wants to bring to Korean consumers, the price of a filter coffee powder product of about 8500 Won
is appropriate.
7.1.2.2 Market penetration pricing strategy After pricing on basic costs, the next step, Trung Nguyen will analyze competitors' goods and prices.
With this strategy, Trung Nguyen Company will conduct market research on the prices of products
of the same type. In Korea, a filter coffee product of about 500g has a price ranging from 15000 Won
21
to 25000 Won, corresponding to about 300,000 VND to 500,000 VND. Aware of that, businesses
will price products at an average of about 20,000 Won compared to the general level of similar
products.
