Module number: P58805
Assessment Report :
The Pricing Strategy And Tactics Undertaken
By The Golden Wonder Nation’s Normous Noodle
Bunny Menra
10016309
November 24, 2010
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CONTENTS:
Overview of Product..............................................................................................3
Pricing and its Importance....................................................................................4
Setting up right price: Nation’s Normous Noodle Case Analysis....................6
New Product Pricing..............................................................................................8
Conclusion……………………………………………………………………………..12
References..............................................................................................................13
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Overview of the Product
Nation’s Normous Noodle is the latest entry to Golden Wonder’s chain of Nation’s
Noodles. This product was launched in September 2010 by one of the most iconic
and nostalgic British Brand Golden Wonder.
The Golden Wonder brand is over 60 years old and for many years was a brand
leader. Golden Wonder launched the first ever Pot Noodle product in 1977. Leading
Northern Irish Crisps and Snacks manufacturer Tayto Group Ltd bought the brand in
2006 and Tayto Group is now the 3rd largest Crisps and Snacks manufacturer in the
UK.
This product was launched by Symington’s. In April 2009, Symington’s agreed a
licensing contract to use the Golden Wonder brand to launch The Nation’s Noodle
and Pasta range. Symington’s has enjoyed a rich history over the last 180 years with
success based on providing great tasting food. Today, Symington’s is evolving into a
modern business with a passion for creating quality food that is quick and easy to
prepare.
In 2009, Symington’s reinvigorated the nostalgic Golden Wonder brand with the
launch of The Nation’s Noodle. As the name suggests, The Nation’s Normous
Noodle is an opportunity to extend the core brand with a new size for bigger
appetites, 25% larger than the standard size. The product is launched at 99p for
112g-116g pots. While the brand’s familiar visuals are maintained, Symington’s has
taken advantage of the new pack’s extended labeling area to give prominence to the
fact that the new size is ‘Normous’.
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Pricing and its importance
Price is value placed on a product. Price is a key element in marketing mix as it
generates revenue directly (Dibb, Simkin et al, 1994 pp. 478). Setting a pricing
strategy is one of the greatest challenges faced by a company in marketing.
Company cannot set their price too high and want customers to look for alternatives.
Nor can a company afford to set prices low enough to see profits disappear (Catriona
MacKay, 2008 pp. 76).
But above strategies can also have different effects. A company can raise price to
emphasize on quality and status. By lowering the price, company can emphasize
bargain and attract customers. So, setting a pricing strategy requires techniques and
tactics that represent your product well to the customers and also get profits at the
same time.
As mention by Dibb, Simkin et al (1994 pp. 479-483), pricing strategies can be price
competition and non-price competition. In case of price competition price is
emphasized more and marketer tries to match or beat the price of competitor.
Whereas, in non-price competition price is not what is important seller rather focuses
on distinctive product features, quality and brand status.
In the case of Nation’s Normous Noodle, it is clearly case of price competition. Pot
noodle which was originally golden wonder’s product was bought by Unilever and is
considered to be a market leader in its category. When launched, Nation’s Normous
Noodle was priced at 98p. Pot noodles’ simple packs are priced at 1 pound whereas
the King Pot Noodles, which is Normous Noodles’ direct competitor, are priced at
1.35 pound.
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Prices and weights of Normous Noodle and various competitors are shown in table
below.
Table 1: (sources: www.mysupermarket.com and www.groceries.asda.com)
Products Prices Price/100g Offers
Nation’s Noodle 98p 1.05 pounds N/A
Nation’s 98p 1.23 pounds Tesco- N/A
Normous Asda- 5 for 2
Noodle pounds
Pot noodle 1 pound 1.11 pounds Tesco- N/A
Asda- 4 for 3.50
pounds
King Pot Noodle 1.35 pounds 1.18 pounds Tesco- N/A
Asda- N/A
Asda 35p 50p Asda- N/A
Smartprice
Noodle
Tesco Value 35p 50p Tesco- N/A
Instant noodle
Super To Go 78p 91.8p Tesco- 3 for 2
noodle pounds
Asda-N/A
Nation’s Noodle is available in Tesco, Asda and Morrisons but not in Sainsbury’s.
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Setting up right price: Nation’s Normous Noodle Case Analysis.
Behavioural researchers say that price attached to product provides a basis for
developing impressions of product on consumer (Olson and Jacoby, 1972)
There are certain points that affect the final price of the product.
1. Brand value: In the given case product’s brand Golden Wonder is an iconic
and nostalgic brand. In deciding how price premium is driven for grocery
products, not only quality, but brand equity plays a very essential role (Johan
Anselmsson et al, 2007)
David Cherrie, Marketing Manager at Symington’s, comments; “Golden
Wonder has a fantastic heritage in the instant hot snacks category so we’re
absolutely thrilled to be bringing it back. The brand already means so much to
so many Brits but we’re confident that there’ll be a whole new generation of
fans once people get to taste the product. We’ve done everything we can to
make sure that Golden Wonder: The Nation’s Noodle is the best tasting
product in the category. Huge sales are expected so retailers need to make
sure they’re stocked up for the launch this summer.”
(Source: www.talkingretail.com)
2. Competitor’s pricing: As already shown in Table1 Golden wonder has chosen
its pricing very well as compared to its competitors. It has kept itself well
above the most of similar products. But price is kept a little low than Pot
Noodle.
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3. Prices of company’s existing products: Golden Wonder has similar pricing for
all other products. Their crisps and snacks are available in market at lesser
rates than the competitors but more than small or store brand products.
Golden Wonder maintains it image as a brand offering quality products at
lower costs.
4. Quality of product: Golden wonder has tried to reflect good quality of their
product by setting their price a lower than Pot Noodle, but higher than all the
other brands offering similar products.
5. Customer Expectations: Golden wonder is a very old brand. They offer all
their products at low prices from ages. This means that customers would
expect a similar price category product from them. This is true in case of
Nation’s Normous Noodle.
6. Volume Goals: It is not very sure if a volume goal is one of the criteria for
Golden Wonder to set their prices. This is because this product is available
only in certain stores. But then again this can be due to distribution problems.
7. Manufacturing costs: Statistics N/A.
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New Product Pricing
When a new product is being introduced into the market, company has to consider
level to set prices based on their plans for product. There are four ways for them to
enter the market (Catriona MacKay, 2008, pp. 77-78).
Fig. 1: Pricing Strategies Matrix
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When a company introduces an imitative product, the biggest challenge is to position
the product properly. There are four positioning strategies a company can adopt. It
can either offer a low quality product and also charging very low price. Also, a
company can introduce a high quality product and charge high prices focussing on
the high quality (Armstrong et al, 1999, pp.719-720). Other two strategies are short
termed and are offered to gain a particular position or volume goal. Golden Wonder
Nation’s Normous Noodle uses Penetration Pricing which is a strategy that is
employed by keeping the price of your product extremely low in order to build
volume. Companies set a low initial price in order to penetrate market more quickly
and deeply. Once targets are achieved prices are raised. This can be considered true
for Nation’s Noodle. This is because this product was launched at 50p as introductory
price and after very short period the price was raised to 98p. This introductory price
was part of product launch.
Advanced pricing strategies
These strategies are usually adopted by already existing products or already existing
brands introducing new products, which is the case of Nation’s Normous Noodle.
These strategies are:
1. Psychological pricing: when company uses pricing that ends with number 9.
This is also called odd-even pricing and to some extent applies to our
product. Nation’s Noodle as well as nation’s Normous Noodle are priced at
98p which is very close to 1 pound and can be termed as psychological
pricing.
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2. Product Line Pricing or Price Lining: This is when company wants to slip a
product into already existing product line and chooses a number that fits its
products price line. This case is best fit for Nation’s Normous Noodle, which
was introduced as extension to Nation’s Noodle Product Line. It was priced
same as the existing Nation’s Noodle range though it claims it is larger in
size. This step cannot be justified or is rather strange. When pricing a product
line or changing the price of a particular product in product line, price setter
should consider the effect of this change on all the models in the line. If price
difference is less, consumers will generally buy more advanced product
(Armstrong et al, 1999, pp. 722-723).
3. Promotional Pricing: In this pricing strategy, company experiments and sees
what consumers respond to best. This is most commonly used pricing
strategy and is also being employed by Nation’s Normous Noodle. As shown
in chart 1, in Asda this product is available at a promotional price of 5 for 2
pound. But, this strategy can also be considered wrong. Discounting the
product too much can not only give away profits but will deteriorate the image
of brand; this could also make customers less loyal and look for alternatives.
There are some other concerns like overreliance on price reductions,
disruption of demand patterns, deal proliferation and clutter and redemption
abuses (James Cross et al, 1988).
4. Competitive pricing: This is particularly applicable if company is coming into
an established market and wants to bring down the market leader. This is
what Golden Wonder tried to do when they launched this product. This
product was introduced to compete with well established Pot Noodles.
As an article on www.marketingmagazine.co.uk says
“Golden Wonder to take on Pot Noodle with 'The Nation's Noodle.”
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5. Value pricing: it is not just cutting prices; it involves a delicate balance
between quality and price. Rather than cutting the prices to match the
competitors, company adds value added services to differentiate their offers
and support high profit margins. (Armstrong et al, 1999, pp: 730-731). This
can be considered true for Nation’s Normous Noodle. They always emphasize
on good quality with average prices. But, the value added offers attached to
them give them an edge over competitor’s prices and quality image is also
retained.
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Conclusion:
Pricing is a dynamic activity, which keeps changing throughout the life cycle of
product. Companies adjust their pricing according to different customers and
situations (Armstrong et al, 1999, pp: 740). Golden Wonder when introduced this
product used market penetration technique. Later they increased the price and
employed competitive pricing strategy mixed with Product Line Pricing, Value Pricing
and Psychological Pricing. Then they introduced the Promotional Pricing Strategies
and introduced great offers and deals for their product. Golden Wonder is trying
different mixes of pricing strategies and tactics. Strategies are all carefully executed,
but if stability of price is not achieved at this stage and any further experimentation
done with pricing can spoil the image of product. This can also lead to perception of
product as low quality and thus resulting in loss of sales. The introduction of nation’s
normous noodle at a similar price as nation’s noodle cannot be justified. Since this
product claims to be of larger size and different from already existing nation’s noodle,
it’s pricing should reflect this claim. Moreover, in spite of Golden Wonder employing
different pricing strategies customers’ inclination is more towards Pot Noodle.
In an attempt to explain there are no winners in price wars, Joern Meissner (2010)
states that:
“Instead of allowing your salespeople to empty warehouses below price, tell the rest
of your company to create products and promotions that customers can actually see
tangible value in.”
Therefore, Golden Wonder should do a market research to understand the problem
and then make changes in price and quality if required.
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References:
Catriona MacKoy (2008), The Greatest Marketing Tips In World.
Dibb, Simkin, Pride and Ferrell (1994), marketing: concepts and strategies.
Ed Kemp (2009), Available from:
http://www.marketingmagazine.co.uk/news/922848/Golden-Wonder-Pot-
Noodle-The-Nations-Noodle.
Golden wonder admin (2009), available from:
http://www.talkingretail.com/products/product-news/golden-wonder-launches-
the-nations-noodle.
Jerry C. Olson, Jacob Jacoby (1972), "Cue Utilization In The Quality
Perception Process", in Proceedings of the Third Annual Conference of the
Association for Consumer Research, pp. 167-179.
Joern Miessner (2010), ‘Why There Are No Winners In Price Wars’ (other
than the customer), available from: http://www.meiss.com/blog/page/3/.
Johan Anselmsson, Ulf Johansson, Niklas Persson, (2007) "Understanding
price premium for grocery products: a conceptual model of customer-based
brand equity", Journal of Product & Brand Management, Vol. 16 Issue: 6,
pp.401 – 414.
Philip Kotler, Gary Armstrong, John Saunders, Veronica Wong (1999),
Principles of Marketing, Second European Edition.
Steven W. Hartley and James Cross (1988), the Journal of Consumer
Marketing, Vol. 5 No. 3.
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