BOSTON PIZZA COMPREHENSIVE CASE Cost of Foods Sold A funny thing happens when you decide to eat healthierthe food is sometimes not quite as tasty, yet usually more expensive. When Boston Pizza decided to address the emerging healthy eating trend with its Smart Eats menu, the challenge was threefold. First, the food had to be up to the delicious standards held by the brand for 50 years. Second, the meals had to have evident health benets. Third, despite the cost of providing healthy ingredients, the prices had to be congruent with family casual dining. The same three challenges existed to an even greater extent with BP's GlutenWise line of products catering to the growing gluten-intolerant market. Although in this situa- tion, a fourth challengedeveloping a pizza dough that would adequately adhere to the \"hand-kneaded\" texture BP's customers are accustomed tointroduced a direct and significant variable cost to the mix. Anyone on a glutenfree diet will tell you that any gluten-free baking with any quality of flavour and texture is going to cost more. While Boston Pizza offsets the costs of making glutenfree pizza by marginally increas ing its price, that product line, along with Smart Eatsand the entire menu, for that mat- terare exposed to the ups and downs of economic cycles as well. Since the nature of healthy eating is often defined by fresh versus processed food, the cost of goods sold is very difficult to predict, given that it's more prone to fluctuations in global supply and demand and, in Canada's case, often volatile swings in the exchange rate. As president and CEO Mark Pacinda says, \"A lot of our vegetables come from Califor- nia, so a) we're dealing with the exchange rate, which creates an uptick in costs, and b) yes, there has been an increase in the price of vegetables over the years.\" He adds, \"We monitor our costs, so we tend to know what's going up and we work with our suppliers and try to lock that [price] in.\" The other silver lining for BP is that 50 percent of its business is either pizza or pasta, \"so we've been able to hold pricing across our chain," claims Pacinda. The cash-cow nature of BP's biggest sellers also allows the brand to provide the healthier, costlier menu items at prices that are consistent with standard BP fare. QUESTIONS 1. If Boston Pizza's prot margin is less on its Smart Eats and GlutenWise menu offer- ings, why doesn't it just increase the price of these items more signicantly to create greater profit margins? 2. Based on the theory outlined in this chapter, how would you classify Boston Pizza's overall pricing strategy? Support your response. 3. How does demand affect the price of Boston Pizza's products? BOSTON PIZZA COMPREHENSIVE CASE PR Meets Advertising: We'll Make You a Fan According to the integrated marketing communications (IMC) w approach, a firm can maximize the impact of its promotional tools only when they're all working together, bearing a similar mes- sage, carrying a similar theme, and generally \"integrated.\" Boston Pizza kicked off its 51st year by bringing forward an IMC program that was not only committed to delighting its customers but also celebrated its sports bar roots and the transcendent nature of sports in Canadian culture. The \"We'll Make You a Fan" positioning \"gets at the heart of what Boston Pizza is all abouta place for Canadians to connect over two things they love: sports and food," said Steve Silverstone, executive vice-president of marketing for Boston Pizza International. \"Nearly every Canadian has some kind of con- nection to sportswhether as spectators, participants, players, coaches, managers, or parents who drive their kids to and from practice. Boston Pizza is the restaurant where you can show up with a group of 20 kids wearing soccer cleats or with a buddy after a game of pickup hockey to watch a game in the sports bar.\" \"We looked at our company and we asked, 'What makes people want to come into Boston Pizza unprompted?'" explains CEO Mark Pacinda. When the long-awaited Floyd MayweatherManny Pacquiao boxing title fight finally occurred in April 2015, Pacinda recalls going to a Boston Pizza location with his son to watch the fight. \"It was packed. There were 120 people on the patio looking in to see the fight, and then 10 minutes before the fight, there were 150 people in the parking lot who couldn't get into the restaurant because we were at capacity.\" That anecdote says a thing or two about BP's clientele and culture: There's a pretty deep passion for sports. \"We have a saying,\" Pacinda remarks. \"We don't line up for the Academy Awards, but we'll line up for sports!\" True to the principle of IMO, the \"We'll Make You a Fan\" campaign crossed all forms of advertising, direct and social media, public relations, sales promotions, and personal sell- ing. lf today's best brands are also the best storytellers, BP etched its logo into that cate- gory with \"We'll Make You a Fan .\" QUESTIONS 1. Why is it important for marketing communications functions to be \"integrated"? 2. Research Boston Pizza's \"We'll Make You a Fan\" campaign and list examples of the various IMC categories. 3. Did BP risk losing, or alienating, customers who weren't necessarily sports fans? Explain your response