The cost that incur in making or marketing our product as following: the ingredient, such as the Hippophae, herbal. The cost of rent, we need to find a place to be our store. We need to build and open our market which may occurs some costs, such as the cost of advertisement, the cost of sales person and the cost of transportation. We also need to pay the salary of employees. The cost of logistic, all our ingredients are coming from the world market, we need to transport it to our factory. For our long-term goals, we decide to distribute our products to every big retailers, such as the shoppers, Wal-Mart, Loblaw and Costco. By contacting with these big retailers, we need to pay for the networking and negotiation.
2. Using the costs as calculated above and your profit objective, calculate the optimal price you should charge.
The cost of rent, we decide to place our store in Midland and Finch, Scarborough. Because there are many Chinese immigrants live in Scarborough, which is close to the market. What is more, the most Chinese immigrants in Canada are senior and children. We choose them as our target consumers. So our budget for the rent is 3500 dollars per month. We plan to improve our reputation and the image of our company. We will pay for the advertisement and the budget will be 100,000. We will do the advertisement on TV, internet and send flyers. We also need to pay the salary of employees. We plan to hire 3 sales to open the market, 1 accountant, 2 people who run the transportation. All of these will cost us 7500, 4500 and 6000 respectively. The cost of logistic, all our ingredients are coming from the world market, we need to transport it to our factory. We decide to transport all our products by boat. The cost of transportation is reasonable and the time spending on it is acceptable. Our budget on logistic is 10,000. By contacting with these big retailers, we need to build the networking with them, such as join a party to meet them and give them some gift. The budget on the networking that we plan to pay will be 10,000.
3. What price do your competitors charge?
Most of our competitors are North America companies. They have