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“Today Shapes Tomorrow
 Published Every Monday    Volume  134 Special Edition August 3, 2009
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Chapter 8 – Competition heats up but your new strategy seems to be working in week 6

Last week we discussed details of the fifth week. Your new strategy worked.  Your sales soared to 80 lemonades a week.  This week competition from “Jack & Jill Lemonade” intensified. As predicted, your competition dropped the price to $0.75 a cup, which dropped your weekly sales to 45 cups, however, you made some smart moves on the cost and positioned well for the future. Perhaps you have found a way to be different than your competition and continue to be profitable in the lemonade business. 

Your new business strategy seems to be working.  Let us see how you did this week – 

1)  SALES – You sold 45 lemonades this week even though your competition “Jack & Jill Lemonade” down the street dropped the price to $0.75 a cup.

2)  CUSTOMERS – You listened to the feedback from your key customers. You made some changes to the lemonade.  You re-branded to ORGANIC LEMONADE with low sugar. It turned out to be a success.

3)  PRODUCT AND SERVICES – You are keeping the quality of lemonade good. Your service is courteous and the taste is just perfect.

4)  PRICE – So far your price of $1 per glass has worked. You know that “Jack & Jill Lemonade” is now selling lemonade for $0.75 per glass.  So you start to think should you follow and drop your price next week? What will happen to your sales and profit numbers?

5)  COST Analysis –

    • Per the customer feedback, you cut the sugar in half from your recipe, which also helped to cut your sugar cost in half.
    • You also realized that the biggest cost or two-thirds of your cost is from lemons. So you get creative and work out a deal from the local organic farm. If you pick your own lemons the farm will cut lemon price by one third. Not bad!

                     

                   Old Cost = $0.33 per cup                             New Cost = $0.24 per cup (a 27% cost reduction!) 

Your success is recognized by many.  Keep up the good work!  This is how your 6th week numbers look –   


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