In 2019, Karen Weathers, of UTech, Jamaica started Campus Eateries, a small lunch shop on campus, selling hotdogs and burgers. To reduce the startup costs, Campus Eateries had bought used "second hand" baking machines and equipment.

The business grew quickly after introduction. The hotdogs became so popular and profitable that Campus Eateries was soon known for its hotdogs across campus. At times, the demand for its hamburgers were growing so high, Karen had to increase price during peak times to restrict demand. However, Campus Eateries faced numerous down time due to the malfunctioning of the second-hand machines and ovens. Karen was concerned as she knew that costs incurred in production, marketing and distribution (variable cost and fixed cost) are major contribution to the pricing of the company's products.

At commencement of the business, in 2019, Campus Eateries had adopted a simple cost-plus method in pricing its products. However, Campus Eateries had difficulty apportioning the relevant overheads to the business and as the business grew, the challenges also grew. There were several other businesses on campus selling burgers with Burger King being the most well-known.

Although Pricing products can be a bit challenging, it is critical that it be done correctly as it was the only marketing mix element that gains income for the company and directly affected sales and profits.

Campus Eateries is considering adding new products such as smoothies and natural juices to the product mix but realized that when introducing new products, setting price depends on many factors. When setting prices, the objectives of the company could affect the final price being set.

Since 2021, Campus Eateries has started selling its hotdogs and hamburgers in health food stores, gas stations, pharmacies, and little stalls in Papine. The company realizes that online marketing is important and has asked a student in SCIT to develop a website for Campus Eateries. The website would be multifunctional and will allow students to place orders online as well as get information on the company's product offerings, opening hours etc.

Questions

1. Identify two (2) internal and two (2) external factors that would affect pricing the new smoothies and natural juices. (5 marks)
2. Describe the three (3) approaches to pricing that Karen can consider when setting price for the smoothies and natural juices. (6 marks)
3. State two advantages and two disadvantages of using direct vs indirect distribution channels. (4 marks)
4. Discuss four factors to consider when selecting marketing channels. (5 marks)