Price differentials of moon cakes before and after

Price differentials of moon cakes before and after Mid-Autumn Festival in Hong Kong Sandy Cheng (2) Minnie Choi (7) Madelene Ho (11) Joyce Lam (17)

Introduction Nowadays, there are different varieties of mooncakes, such as traditional mooncakes, ice-skinned mooncakes and ice-cream mooncakes etc. Many people would like to purchase mooncakes to celebrate the Mid. Autumn Festival. But how many of them have ever think about the price differential before and after the Mid. Autumn Festival? Will giant companies and small companies have similar strategy in dealing with a large surplus of different kinds of mooncakes? In this project, our group is going to look into details of these problems and the corresponding viewpoints of different sectors of the society.

Comparison of mooncake prices before and after the mid-autumn festival

美心雙黃白蓮蓉月餅 Original price $263 After the festival$263 Credit Card Discount $ 163

美心冰皮 2人世界脆脆系列 Original Price$26 HSBC Discount $100/5

After Mid-Autumn Festival $10/1

恆香雙黃白蓮蓉月 Original Price $278 Sogo Discount $139

大班冰皮月餅 Original Price(Upper Part) Hang Seng Bank Discount (Lower Part)

榮華月餅七星迎月 Original Price $368 Sogo Discount $242. 5

榮華雙黃白蓮蓉月餅 Original Price $278 Sogo Discount $183

恆香迷你七星伴五黃月 Original Price $528 2/10 Sogo Discount $198

After Mid-Autumn Festival

After comparing the price difference of mooncakes before and after the Mid-Autumn Festival, we found a phenomenon that small companies will reduce their prices while big companies will usually remain their prices unchanged or just a slightly reduction or just in specific products. Usually, the big companies will also offer discount by using certain credit cards or special sales in certain place, in order to attract customers.

SO WHY THERE IS THIS PHENOMENON?

POSSIBLE REASONS Large companies do not reduce their prices even after the Mid-autumn Festival may because: 1) To maintain their market domination power and increase their revenue. If they have price reduction, people may buy the mooncakes after the festival which may reduce their revenue. 2) To maintain their high-class image. People always buy mooncakes for gift in the festival. If the prices of the mooncakes go down, people’ s preference in buying their products as gifts may reduce too.

POSSIBLE REASONS 3) People prefer buying their brand since they maybe old brands, which have already developed good images and people are used to buy their brand. 4) The cost of mooncakes are very low. Though they cannot sell all the cakes, they need not to reduce the prices since they gain much more they lose. Hence, it is not necessary to have price reduction which may cost lost as explained above.

WHY SOME BIG COMPANIES WILL REDUCE THEIR PRICES IN CERTAIN PRODUCTS?

POSSIBLE REASONS 1) It is a new product. They reduce prices to attract people to try it, in order to build people’s preference in them. 2) The cost of the specific products are relatively high. They need to sell as much as they can in order to gain the greatest extent.

CASE STUDY: MAXIM We have chosen Maxim to be our case study. We found that Maxim did not reduce it price in the classic mooncakes after the Mid-autumn festival but reduce the price of the ice-skinned mooncakes. They do this because they already have a high preference from people in their classic mooncakes since Maxim is always the highest sales in the years. Instead of having price reduction, they throw away the left over.

CASE STUDY: MAXIM However, their ice-skinned mooncakes are new products, and it is not as popular as other brands like Tai Pan. Therefore, they need to reduce it price to attract people to buy it, increasing their revenue in it and build up people’s confidence and preference in their new products.

CASE STUDY: MAXIM People may confused that why we said that Maxim did not reduce their price after the Mid-autumn Festival since it has given out credit card discount. Indeed, visa card is the most common credit card, many of Hong Kong citizens get at least one of it. People are almost buying the mooncakes in the discounted price. However, after the festival there is no further price reduction. Therefore Maxim is just only making an illusion, setting a high price but give great discount, misleading people to feel that it is cheap and valuable. In fact, most of the big companies are using this pricing strategy to attract customers.

WHAT ARE THE DIFFERENT POINT OF VIEWS OF DIFFERENT SECTORS?

FROM CONSUMERS’ VIEW As a citizen, I wouldn’t appreciate the way that large company did. They will throw away the left over to enhance their reputation. It is totally a waste of resources and not environmental friendly. They can donate it or give discount instead. The price is setting too high, for the poor they will not have the chance to enjoy this festival. For Chinese, they care for the mid-autumn festival; people that are taking Comprehensive Social Security Assistance may not have enough money to eat a moon-cake with better quality. The company should have social responsibility to help poorer instead of just thinking how to maximize their profit.

FROM COMPANIES’ VIEW In the company point of view, they may think that they are right. The aim of a company is to get as much profit as they can. Large companies already have the reputation so that they don’t need to get into the competition of discount. They will still get certain amount of costumers. In order to ensure they will have the maximum amount of money, they will not give out discounts. By using this pricing strategy, they can earn as much as they can, since it is their responsibility to give more dividends to their shareholders.

HOW CAN LARGE COMPANIES IMPROVE?

SUGGESTIONS FOR THE LARGE COMPANIES 1) Reuse the raw materials. Maybe they can try to see whether they can use the ingredients of the left over mooncakes to make other products. 2) They can give the mooncakes to the poor. For example, they can give to the orphanages, the homeless or those who take Comprehensive Social Security Assistance

SUGGESTIONS FOR THE LARGE COMPANIES 3) They should have a better estimation of the market equilibrium of mooncakes in order to reduce surplus. 4) They can give discount to increase the sales, trying to sell all the mooncakes but not just only consider how to maximize their profit.

Conclusion In conclusion, large companies do not reduce their mooncakes’s price as much as small companies do. Our group think that it is different pricing strategy of companies to behave like this. However, large companies also have social responsibility in helping the poor other than just thinking how to maximize their profit as well as maintaining their market domination power and high-class image. We think that large company should improve in their pricing strategy, we would like to see improvement which can benefits the society as well as being environmentally friendly.

Appendix Leaflet: - Maxim - Sogo - 恆香 - 榮華 - 大班