Randall Crater will position itself as an upscale coffee house and Internet service provider. It will serve high-quality coffee and espresso specialty drinks at a competitive price. Due to the number of cafes in East Hampton, it is important that Randall Crater sets fair prices for its coffee. Randall Crater will use advertising as its main source of promotion. Ads placed in East Hampton Weekly, and the Hampton Register will help build customer awareness. Accompanying the ad will be a coupon for a free hour of Internet travel. Furthermore, Randall Crater will give away three free hours of Internet use to beginners who sign up for an introduction to the Internet workshop provided by Randall Crater.
Randall Crater bases its prices for coffee and specialty drinks on the “retail profit analysis” provided by our supplier, Joey Brothers Coffee Co., Inc. Joey Brothers has been in the coffee business for 22 years and has developed a solid pricing strategy.
Determining a fair market, hourly price, for online use is more difficult because there is no direct competition from another cyber-cafe in East Hampton. Therefore, Randall Crater considered three sources to determine the hourly charge rate. First, we considered the cost to use other Internet servers, whether it is a local networking firm or a provider such as America Online. Internet access providers use different pricing schemes. Some charge a monthly fee, while others charge an hourly fee. In addition, some providers use a strategy with a combination of both pricing schemes. Thus, it can quickly become a high monthly cost for the individual. Second, Randall Crater looked at how cyber-cafes in other markets went about pricing Internet access. Third, Randall Crater used the market survey conducted in the Fall of 1996. Evaluating these three factors resulted in Randall Crater’s hourly price of five dollars.
Randall Crater will implement a pull strategy in order to build consumer awareness and demand. Initially, Randall Crater has budgeted $5,000 for promotional efforts which will include advertising with coupons for a free hour of Internet time in local publications and in-house promotions such as offering customers free Internet time if they pay for an introduction to the Internet workshop taught by Randall Crater’s computer technician.
Randall Crater realizes that in the future, when competition enters the market, additional revenues must be allocated for promotion in order to maintain market share.
As a retail establishment, Randall Crater employs people to handle sales transactions. Computer literacy is a requirement for Randall Crater employees. If an employee does not possess basic computer skills when they are hired, they are trained by our full-time technician. Our full-time technician is also available for customers in need of assistance. Randall Crater’s commitment to friendly, helpful service is one of the key factors that distinguishes Randall Crater from other Internet cafes.