Day before y'day, I took my son to CocoBerry's outlet close to Juhu Beach. For the first time I noticed their menuboard carefully, and was left completely surprised by their prices.
CocoBerry is a Frozen Yogurt chain operating in India since 2009, and has about 40 outlets in 9 major cities. Along with Frozen Yogurt, they serve Smoothies, Sandwiches, Parfaits and Beverages. They were recently in news for having acquired more than 1 million Facebook fans.
Currently, CocoBerry has priced its Small size frozen yogurt serving at Rs. 58, Medium size at Rs. 122, and Large size at Rs. 197. I am sure on a per ounce basis, Large size must be the most attractive deal, followed by Medium and Small sizes. Given that the Large size is not over priced at Rs. 197 (less than $4), there should be many more customers buying Large size serving vis-a-vis the other sizes. However, this was not the case. I spent about 20 minutes at the outlet and during this time noticed that, out of the 12 customers who visited the outlet, every single customer ordered small size serving.
Sure my sample size is small, but I am sure their sales mix distribution will be way off than the industry, which runs around 40%: 40%: 20%. By pricing their Small size significantly lower than the Medium size (Medium size is more than 2x the Small size price; 3 digit vs. 2 digit pricing), they have created a big hurdle in the minds of the customers. Now the customers are not even bothered about comparing the sizes anymore, and see if there is any price per ounce benefit. CocoBerry doesn't even mention the sizes of the cups on the menuboard, so even if a customer wants to compare the prices he or she will have to ask the person at the counter!
Instead, if CocoBerry raises the price of its small size serving to 80, and drops the prices of medium and large sizes to 97 and 115 respectively (and maybe reduce the sizes of the medium and large size cups a bit), they will be able to get the customers to spend much more money with them, and see better revenues and profitability.
Until then they are just making their prices work against them!!
Well said Anshu. Pricing is a lot about understanding human behavior and Cocoberry seems to have just missed that.
ReplyDeleteAnshu:
ReplyDelete1) The other important thing about pricing food products consumed on premises is the value of the eating-in experience. I don't know much about Cocoberry, but most coffee shops with seating do price the value that the customer is placing on the ability to sit at the premises and conduct a social/business conversation.
In the case of Cocoberry, if most people are buying the small size even though its much cheaper on a per Ounce basis, then it may be that they are valuing the eating-in experience.
2) The chain also needs to conduct a small survey to understand the usual serving size of their product. If the usual serving size is smaller than the 'Normal' size then most people may be inclined to choose that size since any bigger size would amount to 'overeating' in their mind. The usual dessert serving size should be pegged to a Normal, with bigger servings/portions/sizes available for those who want to make a meal of it (or those who are of a bigger size like me ;-) )
Going by what you saw, they do need to reconsider their pricing and serving sizes.
Raj
Interesting - seems like someone skipped economics 101 to understand marginal utility!
ReplyDeleteor
The primary target for their large size are "to go" customers - family size concept, who knows?
Dear Sir your suggestion of pricing small size at Rs. 80 will work for an established category and a brand of food product but, not quite well for a new brand that is working on creating a new category - yogurt. Frozen & flavored curd is new category to Indian consumers (except in East where consumers recognise it as mishti doi). Further most of the Indians eat curd and related products everyday (mostly at home) so, Cocoberry will have to work extra hard to prove the value proposition of eating frozen & flavored curd, that too outside their home. The current price point of Rs. 58 for small size serving is just right to attract more early adopters (average monthly pocket money of Indian students is Rs. 259). As the category grows over time, Cocoberry can adopt the pricing of their products as described by you - to nudge consumers to buy large size servings.
ReplyDeleteRead latest article on this category from ET brand equity:
http://economictimes.indiatimes.com/features/brand-equity/flavoured-and-frozen-yoghurt-can-it-replace-the-good-old-dahi/articleshow/12518556.cms