Marketing lessons by example:
Cafe Coffee Day (CCD), known for its relaxed atmosphere, where you can have long, leisurely conversations over some coffee, has made some very illogical choices about its store locations.
I remember seeing a CCD at Essel World. I wondered, how many people may go to Essel World to have a leisurely conversation?
I saw some other CCDs on highways. Again, people stopping on highway to have a quick snack and beverage don’t really have that luxury or inclination of having relaxed conversations over coffee.
In my opinion, it is a marketing mistake. Location is the most important criteria for such outlets. The almost always deserted outlets at such places prove the point,
CCD must try to be where its customers may need it, and not everywhere.
An amusement park and a humming highway are the most unlikely places its customers may be looking for a CCD.
What do you have to say?
The following are the reasons behind the ridiculously high prices of food items inside multiplexes and theaters.
1) The charge is not for the food, it is for WHERE you buy them. Popcorn priced at Rs 5 at railway stations, suddenly becomes worth Rs 50, because the customers who come there are believed to be the ones who don’t look at the price. The multiplex owners understand that the people who can pay Rs 300-400 for a movie ticket won’t mind paying few hundred rupees for snacks. This is based on the understanding of consumer behavior.
2) The prices of the movie ticket and the snacks in the multiplexes are also kept high to encourage only those customers who can pay that much.
It is an example of market segmentation.
3) The business model of multiplexes includes sale of food and beverages as a revenue source. Generally, this is outsourced to some third party contractors. These contractors have to pay very heavy charges to the multiplex owners for getting a space inside the multiplex, so they have to recover it from their sales, leading to exorbitant prices.
4) In the long run, the illogically high prices of food and beverages (and also the movie tickets) lead to customers looking for alternatives. Till there is no competition, the mutliplexes may get away with such loot. Once, they face competition, they may come down on the earth.
5) People go to movies not very often. So they may ignore such discrepancies in prices because it affects them very rarely. So, the price burden gets distributed among a large number of customers.
The prices will remain high, till there are customers who are ready to pay. This is market economy. It is ruled by demand and supply.