[DEPAUL SOUP CART MKT 202-401] November 18, 2013

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Cody Link
Research Analysis: DePaul Soup Cart
Quantitative Methods and Marketing Prof. Tim Smith
Fall Quarter 2013

Recommendations:
After conducting the necessary research to determine the success of a new soup cart
business, I suggest that owner and operator, Blanca, sell her products in front of DePaul with the
following soups: chicken noodle, tomato, broccoli & cheese, vegetable, potato, and minestrone.
The suggested price point to sell their products, based on the research and analysis of the data is
$4.99 with an estimated profit of $251,004.24 over the course of one business year. When
determining a target market for their products, my recommendation would be to pay close
attention to the ever changing wants of women with respect to gender and Hispanics with respect
to racial demography.
Product Strategy:
To determine the ideal product line up for the new soup cart business, members of MKT
202-401 were asked by Professor Tim Smith to survey 15 students a piece on their habits when
eating out. Survey questions when determining the attitude towards eating out included, but was
not limited to: eating frequency, favorite types of fast food to purchase, pricing, gender and racial
demographics. Results from the surveys were tabulated and refined by removing an extraneous
data. In order to finalize which soups that Blanca would offer, members of MKT 202 were asked
to write down as many soups as possible over a short period of time and based on the 51 student
population; the most frequently submitted soups would make up the menu. In exhibit 1, the
soups are ranked in descending order of popularity where chicken noodle ranks highest with 80%
of the population submitting it. The other top soups Blanca and her soup cart is suggested to sell
are: tomato, broccoli & cheese, vegetable, potato and minestrone. These soups were submitted
by a total of 25% or more of the population. Later in the research and analysis process, we would
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take the data we collected and determine how the demand for soup would match up to
comparable alternatives like hamburgers and pizza.
Pricing Strategy:
While conducting the research, survey participants were asked to provide prices that they
felt were considered expensive, considered cheap, expensive beyond consideration, and
cheap beyond consideration for soup. In exhibit 7, a price sensitivity meter depicting the
intersection points of each line shows a starting point where Blanca should price her products.
Exhibit 8 is a detailed view of the price sensitivity meter allowing us to see that the optimum
price point is where considered cheap and considered expensive intersect ($4.25 per soup).
In addition, the pricing for the other three intersection points are illustrated in exhibit 9. It is my
suggestion that the soup be priced at $4.99 because it lands between the optimum price point and
point of marginal expensiveness so as not to alienate too many potential customers and will grant
the owner of the DePaul Soup Cart a larger profit per soup and resulting profit per year.
Demand Estimation:
In order to determine estimated demand for our product, the research we conducted asked
participants how frequently they believed they would purchase soup from Blancas soup cart.
Possible responses ranged from 2 or more times a week at the high end and never at the low
end. Looking at exhibit 2, the overall category incidence frequency when buying soup from
Blancas cart, respondents said they would most likely buy her soup once a week. The category
incidence frequency represents the percentage of the population which chose each possible
option. With more than 20 percent of respondents choosing once a week to buy Blancas soup, I
believe there is considerable demand to experience success in her business. A breakdown of the
CIF overall, by gender and race is also seen in exhibit 5, where the survey results were tabulated
by encoding each response choice then applying the encoded data to each category. From there,
we were able to calculate total CIF for soups per year across all response categories.
The data was further broken down by determining the CIF with regards to gender and
race. In exhibit 3, the breakdown of gender is depicted with woman having a considerable more
propensity to purchase more than men. For this reason, I suggest Blanca pay special attention to
the wants and desires of her female clientele and any changing or evolving trends they may be
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experiencing. With regards to race, seen in exhibit 4, the overall CIF determined that the
Hispanic population is most likely to purchase from Blanca. In the once a month category, the
Hispanic survey respondents showed a considerable lead over their White, Blank, and other
peers.
Finally, with respect to the demand estimation for Blancas soup cart, we compiled a
projected sales estimation for two locations: DePaul and an alternate location, Wicker Park. A
table depicting estimated sales can be seen in exhibit 6 where the DePaul location and Wicker
Park location are compared. For the DePaul location, we estimated that Blanca would have four
days of operation per week and a total of 5,000 possible clients (20,000 people per week). We
came to the conclusion that Blanca would have approximately 433 clients a day then applied the
same calculation to sales per month and per year (7,498 and 90,064 respectively). The Wicker
Park location has a considerably smaller possible buying population with only 7,500 weekly
possible clients over the course of six days of operation a week. We concluded that at the Wicker
Park location, there was a possibility of selling 108 soups a day and 33,696 a year.
Target Marketing Selection:
Based upon the CIF which was discussed above in the demand estimation section, we
were able to decide upon our target markets. Women, as seen in exhibit 15, are clearly more apt
to purchase soup from Blanca than their male counterparts. After performing a T-Test (exhibit
15), the P-Value on the basis of gender is 3 percent. Compared to our chosen alpha of 5 percent
we can conclude that the relationship between gender and propensity to buy soup are related.
Additionally, in exhibit 16, the same process was applied to race but utilizing a single factor
anova, and the resulting F-Test P-Value of 88 percent. This would allow us to accept the null
hypothesis at our chosen alpha of 5 percent. For this reason we can assert that racial profile and
propensity to buy soup have little if any relationship towards one another. A detailed view of
racial CIF is seen in exhibit 17 where it is clear that the Hispanic population is our prime
audience. The least likely population to purchase soup from Blanca is the white respondents so I
suggest that Blanca pay less attention to them but being mindful not to ignore them all together.

Distribution Strategy:
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Finally, we determined for each of the aforementioned locations where Blanca would
need to perform before a profit could be seen. In exhibit 10 and 11, graphical analysis of
expected profit shows that the Wicker Parker location has a considerably faster timetable in
terms of profit than DePaul. Keeping that in mind, the Wicker Park location also has a
significantly lower fixed cost which affects how quickly Blanca will see her profit. What the
Wicker Park location lacks is a comparable buying population. If Blanca was to sell soup in
Wicker Park she has an estimated 108 total customers per day whereas the DePaul location has
433 customers per day. So we can conclude that although Wicker Park has a smaller overhead
than the DePaul location it is possible for Blanca to recoup her fixed costs at DePaul based on
sheer sales volume in a reasonable amount of time.
In order to demonstrate the breakeven analysis further, a table of values was created to
show exactly how many soups Blanca would need to sell and at each price point. Using the price
we determined earlier, we can see that for Blanca to breakeven she must sell 2036 soups at the
optimum price point. Referencing exhibits 12, 13, and 14, we notice that Blanca needs not sell
as many soups at her Wicker Park location to breakeven. However with that being said, yearly
profit should be analyzed before landing on a final spot to sell her soup. We estimate that Blanca
can make $183,534 if she was to not deviate and keep her selling price at exactly $4.25 (the
optimum price point). What I am suggesting though is for Blanca to increase her price to $4.99
where she could realize a possible $251,004.21 in profit yearly. Comparatively, if Blanca were to
locate her soup cart at the Wicker Park location, her yearly profit would be $112,116.12 at the
$4.99 price point. A respectable total, yes; however she can see a far higher return from locating
her business at DePaul.
Final Analysis:
Being given the opportunity to sell soup or to take a salaried job, Blanca would be wise to
keep with her soup cart. She would make exponentially more than an entry level corporate
position at either location and she has the flexibility of choosing what days she would operate her
cart. To maximize profit, I believe that Blanca should locate her cart at DePaul where she will be
exposed to the largest buying audience and possible profit.