Question

Rana is a sharp minded business man. He is quite updated and seeks opportunities to earn money. Along with his business activities he is also engaged in the social circles around him. He is an active member of several NGOs and welfare societies. Donating a part from his income on welfare work is his practice.

He comers to know that there is a severe food shortage in an underdeveloped city. A bright ideas comes to his mind to avail the opportunity to earn huge profit. He arrives to that city with a lot of food stuff to sell to starving people. He plans to sell all the stuff at higher prices as poor people are ready to spend all their life savings to buy and store food.

After few hours of his arrival, he is informed that few heavy vehicles with food items from different NGOs are on the way to supply food free of cost. The poor people are still unaware of this news and not expecting help from the government and independent welfare bodies.

Using the marketing concept what should Rana do?

Answer 1

Answer
Rana should first find out how much days or time, will the heavy vehicles which have food items take to reach the place where there is a shortage of food. The entire strategy of him must be dependent upon this factors. For instance if the time taken by these vehicles is a couple of number of days, he can adopt a strategy of skimming pricing strategy in which the price for foods may be set up at a higher level initially and then as time approaches and few days are left for the trucks to approach, he may gradually reduce the price so that he can his money which he has invested in this opportunity can be liquidated. This strategy will surely work because food is a type of product which needs to have a very high utility of demand initially,that is people can spend higher amount of money if they are extremely hungry and they can pay good amount to purchase it. But if they are satisfied and their hunger is reduced they will not pay much money for food. Gradually at time will pass people will come to know about the vehicles which are loaded with food and they will supply the food at free, as this news will spread people will not spend money on purchasing the food and gradually the the profit of Rana will shrink.
In short Rana can use a skimming pricing strategy to generate profits.

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