Spaans Cookie Company has expanded, and sells its products not only in California, but also in other states. However, there are many Companies that compete with Spaans, which also bake and sell cookies. These companies include the Great American cookie Company that specializes with gourmet cookies. Great American Cookie is based in Atlanta, but it has other 290 stores all over the United States and thus, it is a big competitor to Spaans.
Other cookie companies include Full Bloom wholesale Baking Company, which is based in California and is growing fast and Interstate Bakeries Corporation, which distributes breads and cakes all over United States. Since all these Companies have their own marketing strategies, Spaans continues to come up with many strategies to stay at the competitive edge (Spaans Cookie Company, 2011).
One strategy that Spaans uses is defining the competitive landscape for the new product – pumpkin spice cookie. This helps the company know who the real competitors are, the type of products being sold, how the customers see the competition and the business model used by competitors.
Spaans analyzes its competitors in order to learn their business tricks, and this is done through going to the competitors place and learning more about the business, reading more on the competitor’s website, as well as doing more research on customer reviews.
Kotler & Keller (2009) affirm that understanding the competitors is essential in any business developing new products. Thus, analyzing competitors has helped Spaans to point out their strengths as well as weaknesses. Some of the weakness from other companies includes lack of quality customer service and lack of variety in products.
Spaans have taken advantage of its competitor’s weaknesses and has improved by getting friendlier and kind staff, reducing its prices, and more importantly, introducing the new cookie in the market. Similarly, industry knowledge has kept Spaans at the competitive edge since it was established many years ago.
Despite having many marketing strategies, Spaans should consider an important pricing strategy that determines the product positioning in the market. Pricing also affects marketing elements such as products quality, channel decisions and advertising (Kotler & Keller, 2009). Spaans can use many pricing approaches in pricing the pumpkin spice cookie, but the key ones include customer and competitor based pricing. Customer based pricing has many approaches such as penetration pricing, price skimming, and loss leader
According to Monroe (2003), penetration pricing entails boosting market share of a product and later increasing price after attaining the market share. With this pricing technique, Spaans can introduce the new cookie in the market at a lower as compared to other cookies in order to attract new customers. It is much easy for customers to buy the new product despite having other options due to lower price. Penetration pricing should be used to launch a new product.
Likewise, price skimming entails setting a higher price to a product, which is not currently in the market. Since the new pumpkin spice cookies are seasonal products, Spaans can segment its market, and only use the skimming strategy where the supply of the product is low, but the demand is high. By use of this pricing strategy, Spaans will get higher profits before other competitors create the same product and enter in the market.
Spaans Cookie Company can also use loss leaders strategy, which is a sales promotion method and entails setting a products price below the cost price in order to attract customers. The reason of setting products as loss leaders is to encourage customers to buy more of the company’s products varieties.
Furthermore, the company can factor in competitor based pricing, which involves setting the prices inline with those from competitors because customers may consider the cheapest price. When selling such products, Spaans should come up with unique ways of attracting customers such as better customer service in order to make more sales.
In conclusion, although many Baking companies are trying to make their products unique, Spaans Company strives to gain the competitive advantage since it is the main strategy to survival and achievement. The company aims at coming up with sustainable market advantages such as brand name recognition.
Nevertheless, it is critical for Spaans Company to determine its strengths and its competitor’s weaknesses in order to take emerging opportunities in the market. Additionally, selecting a pricing strategy is important since price is the most visible element, despite having many marketing efforts. Price also reflects the value and benefits the product gives to its customers. Therefore, customer based pricing using the skimming strategy, among others, is seen as the most appropriate pricing approach for the new pumpkin spice cookies.
Kotler, P. & Keller, K. L. (2009). Marketing Management (13th ed.). Upper Saddle River, NJ: Prentice-Hall.
Monroe, K.B. (2003). The Pricing Strategy Audit. London: Cambridge Strategy Publications.
Spaans Cookie Company. (2011). Spaans History. Retrieved from http://www.spaanscookies.com/historyspaans1.html