Channel and Pricing Strategies 1

Running head: Kudler Fine Foods – Channel and Pricing Strategies

Kudler Fine Foods – Channel and Pricing Strategies

Christian Bautista, Cynthia Lyon, Andy Reed, Jesus Santana, David Clark

MKT 571 - Marketing

January 31, 2011

Gregory Luce
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Kudler Fine Foods – Channel and Pricing Strategies

A local upscale specialty food store located in San Diego, Kudler Fine Foods expands the

company globally through agreements with channel partners in Vancouver Canada and the

United States. The established Kudler leadership, building on a niche market of purchasing the

finest products will extend the fresh wide variety of seafood products by launching a new

product offering of a sushi bar, ingredients, and sushi products. The next section of the paper

provides justification and data from research conducted for selecting Canada as the international

market for the product launch. The final element of the paper provides a product launch channel

and pricing strategy for entering the domestic and international markets.

International Market Justification – Product Launch

Kudler Fine Foods offers organic and other premium products to its customers. Senior

management picked Vancouver Canada to sell its sushi products and other oriental products

internationally. The company is following a waterfall approach, in which international markets

enter sequentially (Kotler & Keller, 2006, p. 671). The financial and human resources developed

and the expansion follows a sequence unlike the sprinkler approach; in which many countries

initiated at once (Kotler & Keller, 2006, p. 671).

Kudler Fine Foods chose Vancouver Canada to start its internationalization because its

relatively strong economy. Vancouver is the largest city in the province of British Columbia and

the third largest in Canada. The city has around 600,000 people and the metropolitan area around

two million people (City of Vancouver, 2007). The city has the largest deep-water port in

Canada that serves as a connection for the Asia-Pacific trade. In addition, the city host offices for

different industries such as mining, international banks, law firms, accounting firms, software,

and biotechnology companies (City of Vancouver, 2007). In 2008 the Government of Canada
 KUDLER FINE FOODS – CHANNEL AND PRICING STRATEGIES 3

reported that the average income per family in Vancouver was $68,670 Canadian dollars. The

exchange rate is $1 Canadian dollar for $0.9998 U.S. Dollars

In addition, Kudler’s senior management wants to take advantage of the NAFTA

agreement. The North America Free Trade Agreement (NAFTA) signed in 1994, and establishes

a free trade zone between the United States, Mexico, and Canada (Kotler & Keller, 2006, p.

673). This agreement eliminates trade barriers and investment restrictions between these three

countries. Senior management is positive that the company will face minimum restrictions

expanding the business to Vancouver.

Channel Strategy – Domestic

Companies developing a supply chain should first decide on a target market, design

backward from that point (Kotler & Keller, 2007, p. 241). Kathy Kudler created Kudler Fine

Foods because saw a need for gourmet food ingredients. The company wants to develop a

channel strategy to expand sales domestically. The company recently introduced a fresh sushi bar

where customers order sushi and other oriental ingredients. Kudler Fine Foods is a small

company of three stores with no access to a network in the United States. Expanding sales of its

products to consumers throughout the United States should be done through distributors. The

target market for gourmet foods matches the market for wine drinkers. Kudler Fine Foods should

partner with a large wine distributor. The distributor has established channels to promote

gourmet products including fresh sushi products. Amadeus Wine Distributor services the Seattle

Area in Washington State (Amadeus Wine, 2011). This distributor could serve as the first rollout

and a test. Kudler could prepare the sushi, properly stored, and immediately transported to the

Seattle distributor.
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The sushi must be kept cold and fresh for delivery to the customer. The customer of a

wine distributor is a restaurant or grocery store. When designing a channel there are several

service outputs to consider (Kotler & Keller, 2007, p. 245). Volume size is important restaurants

and grocery stores purchasing sushi through the distributor will need enough products for the

expected business, and may wish to receive shipments every day or every other day. Waiting

time because of the freshness factor for the sushi the delivery channel must be fast. Spatial

convenience is the degree of ease for customer purchasing the product. Kudler will need to create

a seamless ordering system for the wholesale company to order enough for each customer.

Product variety is another service output, sushi sold inside Kudler Fine foods offers customers

the opportunity for variety because the store makes the product to order. Kudler will make and

ship these products to customers, there will need to be some variety available but to the extent

customers find in the store (Kotler & Keller, 2007, p. 245).

Channel Strategy – International Markets

The initial Kudler Fine Foods international marketing launch of the sushi products

and ingredients is Stong’s Market located in Vancouver, Canada. Stong's Market offer a wide

selection of products including all favorite brand name products as well as an extensive selection

of unique, gourmet, natural, and organic products (Stongs Market, 2011). The channel marketing

partnership Kudler leadership developed with Stong’s Market in purchasing products is a natural

transition of launching the Kudler sushi market strategy internationally. Companies need to

select channel members carefully because to customers, the channels are the company (Kotler &

Keller, (2007), p. 248).

Kudler Fine Foods agreed in principle with Stongs Market as a channel partner who

share the same philosophy of delivering quality products and customer service. The partnership
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provide Stongs customers an Asian product, not currently offered, produced by Kudler Fine

Foods and arrive fresh daily for the first six months. A Kudler sushi chef provides training to

Stongs staff during the first six months to ensure staff produces high quality, ready to eat sushi

products. The training provides the staff knowledge in sushi ingredients to teach customers how

to prepare sushi at home. Companies need to plan and implement careful training programs for

their intermediaries. Channel training is also a good competitive tool (Kotler & Keller, (2007), p.

248).

To promote the partnership and motivate the Stongs and Kudler team, a re-grand

opening in the Stong’s Market location to introduce the new high quality sushi product offering

to the customer. An initial marketing blitz through e-mails, newspaper and gourmet magazines

advertise the date of the re-grand opening to increase awareness of the new sushi product launch

at Strong Market. The company must also constantly reinforce that its intermediaries are partners

in the joint effort to satisfy customers (Kotler & Keller, (2007), p. 249).

Pricing Strategy - Domestic and International Markets

Pricing strategies require an assessment of current factors, which affect the price of a

product. A complete cost analysis provides the right price for Kudler Fine Foods sushi brand as it

enters both, the domestic, and international market. The right price necessitates in meeting the

firm’s projected profits and goals while staying attractive to its consumers domestically and

internationally. Price is the only marketing tool that produces revenue. Therefore, marketers need

to recognize that consumers make purchase decisions based on what they consider to be the

current price. Consumers process and evaluate prices using reference prices, price–quality

inferences, and price cues. “In setting pricing policy, a firm follows six steps: (1) select the

pricing objective, (2) determine demand, (3) estimate costs, (4) analyze competitors’ costs,
 KUDLER FINE FOODS – CHANNEL AND PRICING STRATEGIES 6

prices, and offers; (5) select a pricing method, and (6) select the final price” (Kotler & Keller,

(2007), p. 236). In order for Kudler Fine Foods to expand its sushi product into the domestic and

international market it has to evaluate the associated risks involved. The firm has to take into

account the international currency value of Canada, potential trading obstacle, and its distribution

channels and liaison. Kudler Fine Foods sushi brand expansion, domestically and into Canada

will mean exposure to a larger marketplace. For this reason, the firm’s price structure has to be

aligned with its market objectives of increasing customers, revenue, and market share (Kotler &

Keller, (2007). The return on investment will totally depends on the firm undertaking Kudler

Fine Foods sushi brand into these new markets. Cost will be the core constituent on establishing

a price for Kudler Fine Foods sushi brand and not just for customer consideration. The firm’s

operation fixed costs and variable costs must be accurately ascertained during the price setting

process.

The firm must investigate the prices of its competitor’s sushi brands along with their

pricing/marketing strategies and advertising campaigns. That is why, when settling on a price,

Kudler Fine Foods sushi brand must focus on staying competitive as it ventures into these two

new markets. The number of sushi brands selling domestically and in the Canada has produced a

product differentiation among the different brands selling sushi. This product differentiation will

also have to be established by Kudler Fine Foods sushi brand too. Kudler Fine Foods has to

establish itself with its brand and product differentiation to catch the attention of its customers

and with a competitive price point (Kotler & Keller, (2007). The demand for the firm’s sushi

brand, domestically and internationally will then determine/finalize the price. Kudler Fine Foods

will then evaluate how much market share it can command based on its pricing strategy, but it

must also establish it brand. Therefore, Kudler Fine Foods must establish a sushi brand image,
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and seek to earn an identity brand, which will make it more attractive to its consumers

domestically and in Canada through its marketing and advertising campaign. Also the Kudler

Fine Foods must keep in mind the government’s governing regulations and requirements,

domestically and in Canada, as the firm’s sushi brand enters these markets.

Conclusion

The Kudler Fine Foods leadership market strategy to launch the new sushi product

provides the research to meet expanding company objectives and goals. The justification for

selecting Vancouver as the international location is the strong economy, diverse businesses, and

Asian, and Pacific trade connection. The Kudler Fine Foods sushi channel market strategy is

aligned with Stong’s Market internationally and Amadeus Wine Distributor domestically. The

pricing policy is aligned with domestic and international target markets. The Kudler leadership

will monitor the success of the product launch through reporting and frequent dialog with

channel partners and adjust the strategy over 12 months.

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References

Apollo Group, Inc. (2009.). Kudler Fine Foods. Retrieved January 28, 2011 from the University

of Phoenix Marketing 571 website.

City of Vancouver. (2007). About Vancouver. Retrieved from

http://vancouver.ca/parks/board/images/commissioners/aboutvan.htm#economy

Government of Canada. (n.d.). Statistics of Canada. Retrieved from

http://www40.statcan.gc.ca/l01/cst01/famil107a-eng.htm

Kotler, P., & Keller, K.L. (2007). A Framework for Marketing Management (3rd ed.). New

Jersey, NJ: Pearson-Prentice Hall.

Kotler, P., & Keller, K.L. (2006). Marketing Management (12th ed.). New Jersey, NJ: Pearson-

Prentice Hall.

www.stongs.com, 2011. Stong’s market, Retrieved January 27, 2011, from

http://www.stongs.com/index.cfm?fuseaction=content&c_id=4

www.amadeuswinedistributors.com (2011). Adadeus Wine Distributors. Retrieved January 28,

2011 from http://www.amadeuswinedistributors.com/