MNM2614

Product and Price Management

Product and Pricing strategy for House of Bakers

by

Name Student number Contact details

Kefiloe Moatshe 42360854 0729476430

Date of submission

29.06.2020

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HONESTY DECLARATION

I, _KEFILOE GLADYS NANISI MOATSHE__________, DECLARE AND COMMIT

THAT:

• THIS ASSESSMENT IS MY OWN WORK • I DID NOT RECEIVE HELP FROM ANY
OTHER PERSON/STUDENT OR ENTITY • ALL THE SOURCES I HAVE USED
OR QUOTED FROM HAVE BEEN INDICATED AND ACKNOWLEDGED BY
MEANS OF A COMPLETE REFERENCE LIST.

_42360854_____ __KGN MOATSHE___ STUDENT’S SIGNATURE

STUDENT NUMBER

27 JUNE 2020______ DATE

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 TABLE OF CONTENTS

DECLARATION ...................................................................................................................
1 INTRODUCTION .......................................................................................................... 5
2 PRODUCT CONCEPTS ............................................................................................... 6
2.1 FIVE LAYERS OF PRODUCT CONCEPT ............................................................. 6-7
3 CUSTOMER CLASSIFFICATION OF PRODUCTS ........................................................ 7
3.1 HOUSE OF BAKERS PRODUCT CLASSIFFICATION ............................................. 7
4 PRODUCT PACKAGING .............................................................................................. 8
4.1 THREE BASIC TYPES OF PACKAGING ................................................................. 8
5 PRODUCT DIFFERENTIATION ................................................................................... 9
5.1 MARKETING APPROACH AND DIFFERENTIATION ................................................... 9
6 PRICING STRATEGY .............................................................................................. 9-10
6.1 PRICING OBECTIVES, MODEL.COST AND DISCOUNTS .................................... 10
7 GEOGRAPHICAL PRICING ........................................................................................ 11
7.1 ZONE IN PRICING .............................................................................................. 11
8 SELLING PRICE ........................................................................................................ 11
8.1 CARROT CAKE SELLING PRICE ........................................................................ 11
9 CONCLUSIONS ......................................................................................................... 12
10 LIST OF REFERENCES ............................................................................................. 13
11 APPENDICES………………………………………………………………………………14

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 Product and Pricing strategy for House of Bakers

1 INTRODUCTION

2 PRODUCT CONCEPTS

2.1 FIVE LAYERS OF PRODUCT CONCEPT

3.CONSUMER CLASIFFICATION OF PRODUCTS

3.1HOUSE OF BAKERS PRODUCT CLASSIFFICATION- CONVIENCE PRODUCTS

4.PRODUCT PACKAGING

4.1THREE BASIC TYPES OF PACKAGING

5. PRODUCT DIFFERENTIATION

5.1 MARKETING APPROACH AND DIFFERENTIATION

6. PRICING STRATEGY

6.1PRICING OBECTIVES, MODEL.COST AND DISCOUNTS

7.GEOGRAPHICAL PRICING

7.1ZONE IN PRICING

8.SELLING PRICE CARROT CAKE SELLING PRICE

9.CONCLUSION

10.LIST OF REFERENCES

11 APPENDICES

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 1.Introduction

House of bakers was founded by Dolly Moatshe in February 2019 and the ownership
was transferred to her daughters Kefiloe, Olebogeng and Comfort both were committed
to the House of Bakers brand and Kefiloe is also the owner of the House of baker’s store
in Rustenburg Platinum square centre. The Moatshe family has been in running a spit
braai and catering business for more than 10 years. Dolly opened her first shop in
Voortrekker Thaba Tshwane in Pretoria in 2007 before deciding to move to Rustenburg
in 2016. With strong family values and love of food they are the custodians of House of
Brand and endeavour to build and grow House of Bakers further and expend the baking
concept under families as far and wide as possible.

They are committed to introducing and producing new products that add value to the
House of Bakers range .The house of bakers concept is a fresh approach to the baking
industry and was founded with intent of making the convenience and enjoyment of
baking at home available to all customers, with House of bakers home baking is not
only cost effective but an effortless fun to be enjoyed by the entire family . With its easy
to bake range of products, House of Bakers aims to inspire customers to bake at home
on a regular basis.

With more than 200 mouth watering supreme quality products in our extensive range,
food fanatics can find the perfect treat for everyday occasion. Our products ranges from
frozen, chilled, baked to ready to eat made meals, banting friendly range and goods
freshly baked daily.

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 2. Product Concept

The concept of house of bakers products is to achieve customer satisfaction and to have
competitive edge against all other competitors our concept is inspired by a strong family
value believing that the experience of baking our own pastries and cakes will become
a valuable family activity and attraction .there are five layers of product concept that
House of bakers will need to follow to achieve this.

2.1 Five layers of product Concept

• The core Product: According to (Pride& Farrell; 2017:243) “core product is the
key benefit or satisfaction that customers expects from a product”. With House
of Bakers products customers can expect quality readymade pastries, breads
batters all the customer has to do is to prove and bake no mess no mixing and
no cleaning except the pans the were used to bake the product .Our products
are made from 100% butter and milk , we also offer frozen cocktail snacks
,Biscuit dough and ready made cup cakes pies and cakes made from only the
best quality ingredients with affordable prices .
• The Tangible products: The tangible products is the actual physical product
that organisations designs and produces and that incorporates the core benefit
highlighted (Bothma el Machado:2018).House of Bakers offers ready made
cakes and desserts ,our clients can order speciality cakes from us and we will
deliver . Our products categories range from Frozen pastries and batters to
readymade cake toppings and biscuit doughs, we also offer gluten free range
and banting friendly range of sweet treats. With our tangible products our
customers can come in and buy ready to eat meals or slice of cake to curb their
cravings.
• The Augmented Products : This can be defined as a product future to include
the support services and benefits that can be also add value to the total product
(B) Our highly trained and friendly staff are trained to provide our customers with
training and manuals on how to prepare our products .since most of our frozen
items are ready made , instructions are given on the package on how to prove
and bake the product ,most of our pastries can be placed on a pan to prove for
30 minuets and bake for no longer than 45 minutes at 180 degrees. This will add
value to the customers social life as they don’t have to prepare everything from
scratch and waste hours in the kitchen clean will also be easy and this will allow
our customers to spend more time with their friends and families.

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 • The Product image: According to (Bothma; 2018:14) “product image can be
defined as a way customer perceive an actual or potential product”. Our cup cake
and cake batters are neatly and proof sealed in pipping bags that makes it easy
for our customers to pipe in to baking pans with out spilling .Our ready made pies
are filled with the best produce that ranges from chicken , beef , lamb and
spinach and feta and are labelled in a way that customers will be able to identify
which pie they would like to buy. Our frozen cocktail breads, scones are packed
in 10s in clear bags and they all have “sell by date”.
• Product potential: This is the outer layer which include all possible future
enhancements and transformations (Bothma el Machado:2018). Our products
have the potential to be distributed around South African hotels and lodges that
will cut ingredients cost in the hotel industry. The products will turn non bakers
into professional pastry chefs and will allow more people to love baking.

3. Consumer Classification Products

Consumer Classification Products can be defined as products that have similarities and
can be classified together because they meet the same purpose (Bothma; 2018:15).

3.1 Classification of House of Bakers Products

Convenience Products: Can be defined as relatively inexpensive everyday goods that

customers purchase quite frequently. they are generally consumed quickly and do not
last very long (Kurtz&Boone; 2017:346).

House of bakers products can be classified as Convenience products our products have
“sell by date” and once opened they need to be used and consumed with in 3 days,
because our products are ready made from cake toppings to cake batters once the seal
is opened the product needs to be used . Our ready baked pies and cakes also have a
“sell by date” our products are non-durable there for our store only bakes a limited
number of pastries and cakes per day.

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 4. Packaging

According to (Bothma el Machado; 2018:99) “packaging generally refers to the process

of designing, evaluating and producing packages”. Packaging also refers to the way in
which the products is physically transported to its customers. At House of Bakers we
take packaging very seriously, because we produce non-durable goods, we need to
make sure that our packaging is according to health and safety standards this will protect
our products from getting spoiled or causing food poisoning. There are 3 basic types of
packaging that we use to package our products.

4.1 3 Basic Types of Packaging

• Consumer Packaging: This is sometimes referred to as primary packaging and it’s the
type of packaging that vast majority of us are familiar with (Bothma ;2018). Our
readymade doughs packages are clear and distinctive from scones to cocktail shaped
rolls our packages are labelled according to the product that is inside, our toppings and
creams are packaged into pipping bags and labelled according to their different flavours
and dietary ingredients. Our Customers can identify the different products offered by
House of bakers as they are packed in a clear and visible packaging with labelling
outside. Our ice creams come already packaged in box cartons and are leaked proved.
• Reseller Packages: This are products that retailers buy in bulk and repackage them
into smaller packages under their own brand labels .House of Bakers products display
the brand name and logo on each product we supply our products to a variety of
restaurants such as Millaneza Italian restaurant , Kenny Gee and many more in
Rustenburg we also Supply Sun City with our ready to bake pastries and breads which
allows this businesses to serve their guests with freshly baked products and sweets
desserts on a daily basis.
• Grouped Packaging: According to (Bothma; 2018:103) “can be defined as any outer
wrapping that helps to store, transport, identify and protect the product on its way to the
customer outlet are also referred to as secondary packaging”. Because House of Bakers
supplies many Restaurants and hotels, we need to make sure that our products are
neatly packed in clear raps and put into boxes that are clearly labelled with what’s inside
the package. We make sure that our Vehicles have coolers so that our products don’t
get spoiled. All our dessert toppings and cake toppings and batters are sealed and
wrapped in packages that will prevent them from bursting or getting squashed.

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 5. Differentiation

Differentiation can be defined as a process where by business products and market

offering is adapted physically or psychologically , to distinguish it from competing
products (Bothma el Machado ;2018) .This must be done in such a way that customers
regard it as totally different product and are prepared to pay premium for it .

5.1 General Marketing approach and Differentiation of House of Bakers Products

We at House of Bakers differentiate our products through the basis of product quality.
Our Doughs and pastries are made with real butter and free range eggs , we are the first
black owned company to sell prepared frozen dough products our products are
authentic and unique and we the only company in Rustenburg that has gluten free
desserts , banting friendly range of freshly baked goods to cater for different life styles.
Our products have the full log of House of Bakers and our ingredients stay the same
and that’s what makes our product “too good to flop”.

6. Pricing strategies

According to (Bothma; 2018:2014) “A well-Constructed pricing strategy begins with the

setting of pricing objectives where primary objective is survival”.

a) Due to the high quality of ingredients made from scratch products ,and
carefully and at times customized decorated goods pricing at House of
Bakers will be higher than that of the typical retail stores bakery , this will
also depend on the detail of special orders ,the margin may increase for
specific items therefore we will be using Product leadership strategies.
This will set prices that are above all competitors, prices, in order to
differentiate its quality products from those of competitors.
b) The Pricing Model that organisations choses reflect the implementation
of business strategy (Bothma; 2018:245). It is important to achieve the
organisation financial objectives and should be formulated and should be
formulated from the characteristics of the market and the customers that
chooses to serve .House of Bakers will be using the market pricing model
the reason for this is because the cake industry is booming at the current
moment and people tend to celebrate almost anything in our days . With
our readymade sponges and already premade toppings any baker would

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 buy our products to cut ingredients cost and electricity cost. Our prices
are based on the value of the products used to make the products; each
product pricing is usually higher than our competitors prices reason being
its an already semi- finished product.
c) Because supplier prices tend to increase depending on the country’s
inflation, the increase variable cost such as flour, sugar, yeast and wheat
and the cost of material and supplies used to make and package this
product tend to affect the gross profit margin of the business. Fixed cost
such as water and electricity, rent and Insurance also impact the gross
profit margin.
d) Companies offer price discounts, also known as incentives to customers
in order to attract them in the future for repeat of business (Bothma el
Machado:2018). Discounts can be defined as reduction, usually stated in
percentages, from the suggested retail price that types of discounts
House of bakers will be offering their clients are as follows.
• Seasonal Discounts: This are discounts that mainly apply on our selected
seasonal products such as Ice cream, frozen berries and summer desserts. This
Discounts are given to buyers who purchase products on services that are out
of season. The reason we offer discount on our frozen items during the winter
month is because Ice cream is not only a summer dessert but can also be used
on our hot deserts that can be purchased from the pre-baked section.
• Cash discounts: are also discounts that will be applying at our speciality store,
each customer who purchases products for over R350.00 will receive a 30%
cash discount on their purchases for the month of June. Cash discounts are
offered to customers in order to speed up payment to avoid accounts pilling up.
• Trade in allowances: Will be applied in the case a customer or one of our
business clients receive a damaged product. The damaged dough, topping or
batters will be traded in for new products this will assist House of Baker to stay
in good business with its clients and wholesalers.
• Buy-back allowances: Is a sum of money that a manufacture pays back to a
reseller for each item that the reseller purchases after on initial promotional
agreement has been made (Bothma;2018 :221). Our Contractual agreement with
our business client’s states that if a product that a restaurant or hotel buys is not
selling with in the 14 days of purchase the client can request that we buy it back
from them at the same price it was purchases from House of Bakers.

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 7. Geographical Pricing: According to (Bothma; 2018:338) “Organisations and
retailers should decide how to price their products for customers who are located
in different parts of countries worldwide”. Companies should consider whether
charging higher prices to cover increased distribution expenses is worth the risk
of losing the business of more distant customers.
7.1 Zone in Pricing

Zone in pricing refers to prices set within a specific zone or suburb. House of Bakers
will be utilizing Zone in Pricing our customers and wholesalers will fall into a specific
zone that will be charged the same amount. The further away the zone from the point of
delivery, the higher the zone price. Our Company renders its services to Suncity which
is 30-40 kilometres away from our point of business but because they are ordering in
bulk and on a weekly basis we don’t charge them the zone in pricing , as we look to
expend further out of Rustenburg and open our second speciality store in Pretoria
central any new Business that will want to conduct business with us will need to pay 5%
zone in fee this will help to cover fuel and breakdown costs on our delivery vehicles .

8. Selling Price calculations for Carrot cake (24cm)

The final retail price = R359.50

Mark up % of retailers =40%

List price of wholesalers =359.50-(359.50x0.4)

=R359.50-40)

=R319(the price at which the wholesalers will sell the product)

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 9. Conclusion

House of Bakers might be the new kid on the block, but it offers much more to our clients.
We bring fun into baking and give taste a new name. Our main concept is to inspire
individuals and bring fresh approach into baking. By making baking simple and making
it easer for the next customer to buy our frozen, chilled pastries puts joy into producing
this fun delicious pastries and Batters. The satisfaction that our clients gets from tasting
our products puts the stamp that we are making everything in the right way’

Our Products can be differentiated from our competitors as we offer quality fresh and
hearty products on a daily basis , our pies are filled with the best meat not just gravy
our cocktail pastries are filled with only the best quality ingredients you can find that will
live any guest satisfied and coming for more. Since are non-durable we do advise that
once open the product must be used immediately as all our products has “sell by date”.

All our products are tightly siled and labelled according to dietary specialities, each of
our batters and toppings are thrice sealed to avoid leakages and are pastries and
doughs are neatly packed into boxes and labelled accordingly.

Even though we still knew in the confectionery industry we are a force to be reckoned
with. House of Bakes aims to expand outside of Rustenburg and open more Speciality
stores around South Africa. Our pricing strategies will always be higher than what our
competitors are offering be cause we know our products and what goes into making the
best bread doughs, pastries, cake toppings and not forgetting our speciality cakes.

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10. List of References
1. Boone, LE & Kurtz, DL. 2014. Contemporary marketing. Update 2015. [Online]
Availablefrom:https://books.google.co.za/books?id=QkrAAgAAQBAJ&pg=PA18
2&dq=maslows+hierarchy+of+needs+marketing+2015&hl=en&sa=X&ved=0ah
UKEwjludWC_p7VAhVGJMAKHT_ DqsQ6AEIJjAB#v=onepage&q=maslows %
20hierarchy % 20of % 20needs % 20marketing % 20% 202015&f=false
[accessed: 2017-07-23].
2. Bothma, C (ed). 2017. Product management. 2nd ed. Cape Town: Juta.
3. Bothma, C. & Machado, R. (eds). 2018. Product and Price Management. Cape
Town: Juta
4. Cant,MC, Van Heerden, CH & Ngambi, HC (eds). 2013. Marketing management:
a South African perspective. Cape Town: Juta.
5. Diggines, CN, Moshope, R, Soke, B, Du Toit, M, Moseki, M, Van Scheers, L, Da
Silva-Esclana, N & Tsivase, T. 2008. Product and pricing management: Study
guide. Department of Marketing and Retail Management. Pretoria: University of
South Africa.
6. Machado, R (ed). 2017. Price management. 2nd edition. Cape Town: Juta.
7. Pride, W & Ferrell, C. 2016. Marketing. 18th edition. Boston, MA: Cengage
Learning.

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11. APPENDICES

Appendix 1 Our packaged dough

Appendix 2 House of Bakers pies

Appendix 3 House of Bakers cakes

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