Running head: COCONUT PARADISE
1
Coconut Paradise
Muffles Junior College
Principles of Marketing MKT 201-1
Group Members:
Alina Cowo
Marlenis Cartagena
Eric Ardon
Jair Escalante
Cecilio Fajardo
April 15, 2022
COCONUT PARADISE
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COCONUT PARADISE
Pricing.
Factors Affecting Pricing Decision
• Marketing Mix Variables- we will distribute our oil to all retailers possible as for our
product to be everywhere. Thus , we have an intensive product distribution.
• Competition - To have our price we have to be at the average price because there's a lot
of competition and other alternative for our oil
• Buyer's response to price-value consciousness: almost all consumers in general expect
that the price of a product reflects the quality of the oil. Since ours is virgin coconut oil,
consumers expect that the quality of the oil reflects our $14 price.
Types of Discounts
• We will give a non-cumulative discount to the retailer once they bought our oils because
they have to make a profit and we have to give a price lower than the average price.
• Allowance discount will be given once the buyer brings the liter bottle. The buyer will
get a $0.25 discount on the oil bought.
Calculations of our costs:
FIXED COST
Price Per Unit
Liter: $15.50
Gallon(3.8liters): $50
Fixed Expenses:
Electricity
$22.00
Delivery
$100.00
Salary
$240.00
Maintenance expense
Total fixed cost
$12.00
$374.00
Per liter:
Variable Expense:
Bottles
0.45
Plastic cover
0.55
Sticker label
0.50
Coconut @25cents* 12coconuts per liter $3.00
Total Variable
Breakeven Point= fixed expense/cm
= 374/11
=34 units
$4.50
COCONUT PARADISE
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CONTRIBUTION MARGIN
33
Per unit
$
$
$518
$15.50
Less Variables Expense:(37*4) $148
$4.50
Contribution Margin
370
11.00
Less Fixed Expense:
370
Sales (37 units*14)
Net Operating Income
00
To make a profit we need to sell more than 34 liters. This includes a gallon also because a gallon
carries 3.785 liters. Overall, we need to sell 34 liters to cover all expenses and selling more than
37 then we will be doing a profit and profit will be increasing as contribution margin per unit for
every unit sold
In the event that we want to sell only gallons.
Per Gallon:
Variable Expense:
Bottle
$1.75
Plastic cover
$0.25
Sticker label
$2.00
Coconut $37*0.25 $10.00
Total Variable
$16.00
Contribution Margin
Per unit
$
$
$550.00
$50.00
Less Variables Expense:(16*11) $176. 00
$16.00
Sales (11*50 units)
COCONUT PARADISE
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Contribution Margin
$374.00
Less Fixed Expense:
$374.00
Net Operating Income
$34
$00.00
Break Even Point= fixed expense/cm
= 374/34
= 11 units
We need to sell 11 units to cover all costs and what we sell after this amount we will be making
a profit and will be increasing by the contribution for every additional unit we sell.