VORA AND COMPANY CASE STUDY

Submitted to: Prof. Hitesh Manocha

Submitted by: Aditya Saxena 221124 Sakshi Kabra 221125 Sonakshi Shrivastava 221146 Sudhir Singh 221150 Jai Chowdhary 221176 Vishnu Kumar Baheti - 221182

INTRODUCTION
Mr. Voras family had been in the group business

for several generations. The company was organized in 1999 and started to sell its products nationally in 2001. Company has adopted geographical pricing strategy The company has listed Rs. 81 per case for North India and Rs. 85 per case for South India and Bombay. Messers. R.C. Ramanathan were granted a commission off 10 % off list price. Retailers were allowed a trade discount of 10 % off list price.

Analysis of Voras pricing strategy

Calculating for North India List price per case = Rs 81 Commission and discount granted = 20% Net realization value = Rs 64.80 (81 20% of 81) Variable cost per case = Rs 60 approx Fixed cost per month = Rs 2000 approx Contribution = sales variable cost = Rs 4.80 Breakeven point = fixed cost /contribution = 416 units approx Profit achieved from 84 units Profit = sales (fixed cost + variable cost ) = 64.80 (4 + 60) = 0.809 per case Profit for 500 cases = Rs 404 per month approx

Analysis Contd.
Selling price of ganesh mills is Rs 93 per case which

in comparison with Vora is much higher Also the profits earned by Mr Vora is only Rs 404 per month even after selling all the cases which is very low . So there is a need to increase the price of their product in order to earn more profit . Since the market of oats is less price sensitive as there is only one competitor i.e Ganesh Flour Mills, so they can charge a higher price .

Factors Consider for Pricing Strategy

Selecting the Pricing objective : Vora and company

should first decide where they want to position its market offering. The clearer a firms objective is, the easier it is to set price. The major objectives to be covered is survival, maximum market share and maximum current profit. Determining Demand : to understand what affects price sensitivity. Estimating Costs : companys cost takes two forms ; Fixed cost and Variable cost. Analyzing competitors costs, prices and offers : Research on Ganesh Mills financial situation, its recent sales, customers loyalty and their competitors objectives .

Recommended pricing strategy

Since the profits earned by Vora and Company is only

Rs 404 per month , therefore there is a need to improve their pricing strategy.
Also since there is only one competitor in the market

i.e ganesh flour mills , so the market is less price sensitive and therefore they can charge more as compared to their previous list price.
The price of Blossom is less as compared to the

Champions given that the quality and the taste of both the products is almost same , so Mr Vora needs to increase the price of its product .

Assuming that Mr. Vora sells at price of Rs 90 Net realization value = Rs 72 ( list price 20% discount and commission) Variable cost per case = Rs 60 approx Fixed cost per month = Rs 2000 approx Contribution = sales variable cost = Rs 12 Breakeven point = fixed cost /contribution = 167 units approx Profit achieved from 333 units Profit = sales (fixed cost + variable cost ) = 72 (4 + 60) = Rs 8 per case Profit for 500 cases = Rs 4000 per month approx

PRICING: Geographical or Uniform?

Strategy to follow: Geographical Based Pricing Reasons:
Variation in demand geographically
Wider acceptance in South India than in other parts of the

country.
Variation in shipping cost As the company is in Lucknow; Nearer to North India than South India.
Variation in expense for proper distribution channel and

sales force
As the sales force in South India is not so efficient, so need

of more expense there comparatively.

Variation in advertisement expense
As the sale had been disappointing in South India, which

were the largest consumer of Oats, so more advertising is

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