Yatindra Singh 12RM953 Terra Bite Case Study Solutions

Q1. What is the retail value proposition for Terra Bite? A The Terra Bite Lounge is a caf which offers the following value proposition: 1. 2. 3. 4. 5. 6. 7. 8. Good-quality coffee and other related beverages like tea Fast food menu Hang-out place for younger customers Free wireless internet Gaming consoles Good reading selection Refreshing and welcoming environment Pay what you feel like voluntary payment system under which customer can pay whatever they feel like paying.

Q2. Will Terra Bite survive in the long run? Will it thrive? A Terra Bite operates on the experimental concept (or philosophy) of public honesty and trust and relies on the fact that people are essentially good or want to be good. This concept of pay what you want would surely sound suicidal to most of the businessmen and entrepreneurs. But this business model is like a magnet for positive public image and word-of-mouth publicity provided every aspect or SOP of the business is carefully planned-out. For example suggestive pricing, you dont want to confuse the customer by creating a negative environment when it comes to payment, the customer should not feel that either he is paying too less or too much. Also, the location of the caf is an important factor which plays a major role in the ventures success. The demography of the location has to be carefully studied before opening because getting the right-kind of customer base is the key to making profits. So, if the caf is strategically placed and rightly operated, it would not only survive but could also give a tough time to prominent caf chains like Starbucks.

Q3. Can such a concept be replicated in India? If yes, then where? Give reasons to support your answer. A This concept can definitely be replicated in India. In fact, theres already one such caf called Kunzum Travel Caf in Hauz Khas area of New Delhi. Hauz Khas is a posh locality in South Delhi which is an ideal location to open such caf. It is a hub of well-read and affluent strata which received Kunzum Caf with a good response. And the reason for its success is quite apparent, it offers a good place for students and young working population to hang-out complimented by good quality coffee, service and a fine reading selection. So, this model can be successful in areas like Hauz Khas where theres a fair level of customer trust and honesty combined with economic well-being. Q4. When can a retailer opt for voluntary pricing mechanism? A A retailer can opt for voluntary pricing mechanism when he is located in a place where the target audience is financially sound and well-educated and there is an environment of honesty and trust. Also, this concept could only be applied to food and beverages or service oriented businesses because the unit cost is relatively lower and thus the stakes involved are less. So, even if some customers pay less it doesnt affect the retailer to a large extent.