Abstract:

This case study is about an ice cream company that introduces new ice cream flavor of
Honey. When the company introduce new product in the market, with high price, no one will
buy it as they are unaware of about product. The new product will likely to be copied quickly
by competitors that means they can produce it with low price and capture the market. Each
departmental head of the company suggests different views as per their opinions and related
to their department

This case study mainly focuses on Pricing strategy of a new product. Many forces influences
the pricing of a new product. This case also focus on how to consider all the related factors
and then decide price strategy.

Background:

Desert Delights is an ice cream company recognized as the manufacturer of finest and tasty
ice cream company throughout the country. The company has good financial health. The
CEO of desert delights Mr john grew up in a eastern family where taking medicines for petty
problems was frowned upon. Elders in the family believed that minor ailments could be cured
by appropriate precautions and diet control. Mr John particularly remembered how he was
chided for, wanting to eat ice cream when he had sore throat. He was not only denied his
favourite ice cream but was also administered liberal doses of honey.

Mr John majored in commerce college and rounded off his studies with an MBA degree in
marketing from USA. One day he visited his sister who stayed in another country when his
throat become infected. Out of old habit, he gave up ice cream and asked his sister for some
honey. His sister, out of sympathy for her brother, mixed some honey in a bowl of ice cream
and Mr.John ate the ice cream with great delight. The entrepreneur in Mr.John told him that
his sister had an excellent marketable product. So, he decided to introduce a new flavor of
honey icecream in his company Desert Delights which was launched in 1999.

Decision:

The product so developed and was named Honey ice cream, which would protect throat of
those, who relished ice cream, was seen to have been well received.
Problem:

The concept of an ice cream containing honey which would protect throat of those, who
relished ice cream, was seen to have been well received. Mr John thereafter called a
conference of various departments heads to work out a pricing strategy for Honey ice cream.
The manager of finance wanted to the price to be cost of product plus a 100 percent profit.
The Desert delights chief supported him. He emphasized that the product would be copied in
no time and desert delight would lose the advantage and investment for developing the idea.
The sales team advocated a low price to introduce the product so that it would be accepted in
the market . The manufacturing manager was not willing to compromise on the quality to cut
the cost/price. He insisted that Desert delight must maintain its frame name at all cost. The
purchase manager pointed out to the difficulties of buying and keeping stocks of an
agricultural product like honey. He added that this would add to the cost.

Here Mr.John has to formulate pricing strategy for a new product honey ice cream which is
likely to be copied quickly by competitors that means they can produce it with low price and
capture the market. But each departmental head of the company suggests different views as
per their opinions and related to their department. So it is very difficult to consider all the
factors and then decide the pricing strategy.