BU 506 – Managerial Economics

My business is centered on supply and delivery of fruits and the vegetables that are seen to be ugly from their physical outlook and the producers are isolating them from the best ones and in most cases, they go at waste, but they are nutrients just like the other ones which are taken to the store. One of the core factors that motivated me to settle for supply and delivery of fruits and vegetables was based on prevention of wastage. Most fruit and vegetable farmers have often thrown away groceries that do not have pleasing outlook. Only fresh and high quality fruits and vegetables have often been supplied to potential consumers. My business will have high consumer projection based on the fact that the products will be supplied at low prices. The low price tag on the grocery products will be beneficial to the low income households. Equally, I also intend to integrate door to door delivery as an after sales service. The door to door delivery will save customers the extra cost of transportation towards acquiring the groceries. Customers will opt to buy the “ugly” fruits and vegetables since they have the same nutrient content to the fresh ones.

2.

Price discrimination is one of the common strategies of segmenting customers (Czerny & Zhang, 2015). Price discrimination is a selling strategy that is based on selling products at different prices adopted by other suppliers of the similar product. Price discrimination is majorly dictated by what the seller thinks can persuade the consumers to purchase the goods (Bergemann, Brooks & Morris, 2015). On my business of imperfect fruits and vegetables to involve price discrimination, it would be imperative. The price discrimination strategy that I would adopt for my business in selling the grocery products is the third degree price discrimination. Third degree price discrimination occurs when the seller sells products and services at different prices based on the demographic nature of the consumers.

It is evident on my business of imperfect fruits and vegetables will be supplied to consumers that have different demographics. There will be the need to understand the financial levels of the customers and adopt a unique pricing strategy of achieving high sales. I will ensure that low income families are supplied with the products at extremely low prices. Since the supply strategy will be based on door to door delivery. Interaction with the customers will give me a chance to determine household financial level. Supplying the products at low prices to low level households will be instrumental in creating a wide customer base.