hat are the arguments for positioning Carvel as premium ice cream in the Chinese market?
What will be an ideal response?
Following are pros and cons for positioning Carvel as a premium product in China.
Pros
• This will create a niche where competition may not be keen.
• As the market grows, a higher price, which the premium positioning will make feasible, should increase revenues.
• The growth prospects for a premium ice cream, particularly in a large city like Beijing, are much higher as the Chinese economy continues to grow and more people enter the middle class.
• Higher margins should permit making investments in plant and equipment to introduce new products.
• As the prestige image is established, it will be easier to recruit new distributors (for example, department stores).
• Competition will shift to nonprice factors where Carvel has an advantage over other companies.
• The company’s profit economics require setting the price higher.
• It will keep the company’s image globally intact.
Cons
• Premium positioning will require raising the price, limiting the market.
• Under Carvel’s high price umbrella, lower price competitors will grow, limiting growth opportunities for Carvel.
• Premium positioning will require advertising investment that the company can ill afford
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