Economics 1

Launching Of BEST TASTE COFFEE in Lahore

Submitted To SIR KASHIF ALI

SUBMITTED BY SYNDICATERSHaider ArshadM. Faisal TahirMustafa AliUmer KramatAli Ahmed

Coffee market in LahorePakistan is a tea culture. However with time we have seen Pakistan opening its doors tothe coffee culture. Coffee culture has been so fast in spreading its wings with new coffee outletsopening left right and centre in Pakistan. These coffee shops have played an important role inintroducing coffee to the masses in Pakistan. Now that coffee awareness has grown to such extent tea might finally have competition.Younger generation in Pakistan definitely prefers coffee over tea. This is not only because coffeeis more hip than tea but also because coffee is more helpful in keeping energy levels going thantea ever has been. Professionals in Pakistan who need to be on the go for long hours are fastquitting the frequent tea breaks with fewer coffee breaks.In the markets in Pakistan there are many varieties of instant coffee mixes available.Ironically now in Pakistan making tea is considered more difficult now that is how intenselycoffee culture has taken over. In addition usage of coffee in everyday products especially bakery products has become very frequent.Use any coffee mix brew it in hot water, sprinkle with nutmeg, you can add sugar later accordingto taste.Scoop ice cream on a pan over low heat for almost three minutes then pour it over the brewed coffee. Top it with whipped cream and enjoy your coffee in the most unusual way

We are going to launch a new coffee brand in Lahore named as BEST TASTE COFFEEFor this purpose we have divided our target area into different segmentation according to targeted customersWe have following few assumptions regarding our new launching of coffee sachet

ASSUMPTIONS PRICE DEMAND TOTAL REVENUE FIXED COSTStarting Pri 20 20 2080289738 41605794750 5000000

Variable Co 70% 21 1849146433 38832075100 5000000

FIXED COST 5000000 22 1664231790 36613099380 5000000

POPULATI 7800000 23 1512937991 34797573790.9091 500000024 1386859825 33284635800 500000025 1280178300 32004457500 500000026 1188736993 30907161814.2857 500000027 1109487860 29956172220 500000028 1040144869 29124056325 500000029 978959876 28389836417.6471 500000030 924573217 27737196500 500000031 875911468 27153255521.0526 500000032 832115895 26627708640 500000033 792491329 26152213842.8571 500000034 756468995 25719945845.4545 500000035 723579039 25325266369.5652 500000036 693429912.5 24963476850 500000037 665692716 24630630492 500000038 640089150 24323387700 5000000

CONCLUSIONWe have decided to go in the market with market price Rs.20 per sachet as it has maximum profit at this stage.Its demand and revenue are highest at when its price is Rs.20 per sachet.

We are going to launch a new coffee brand in Lahore named as BEST TASTE COFFEEFor this purpose we have divided our target area into different segmentation according to targeted customersWe have following few assumptions regarding our new launching of coffee sachet

VARIABLE COST TOTAL COST MARGINAL REVENUE MARGINAL COST

29124056325 29129056325

27182452570 27187452570 36751785340 25107162816.7473

25629169566 25634169566 34763952923.3333 23785023116.3303

24358301653.6364 24363301653.6 33133341976.7091 22699069846.693123299245060 23304245060 31771697784 21791307051.523722403120250 22408120250 30617597649 21021260406.796121635013270 21640013270 29626983487.3626 20359834951.149620969320554 20974320554 28767435199.2857 19785583541.6384

20386839427.5 20391839427.5 28014568436.2 19282351547.335219872885492.3529 19877885492.4 27349691519.1471 18837740602.7728

19416037550 19421037550 26758236592.8235 18442077652.029919007278864.7368 19012278864.7 26228682272.7193 18087705625.8978

18639396048 18644396048 25751797138.9474 17768484556.730818306549690 18311549690 25320097914.2571 17479433771.4737

18003962091.8182 18008962091.8 24927454482.3117 17216470739.040117727686458.6957 17732686458.7 24568797338.5652 16976217438.3524

17474433795 17479433795 24239897774.3478 16755854730.297117241441344.4 17246441344.4 23937200542 16553011405.6425

17026371390 17031371390 23657694945.52 16365678647.0562

We have decided to go in the market with market price Rs.20 per sachet as it has maximum profit at this stage.Its demand and revenue are highest at when its price is Rs.20 per sachet.

PROFIT / LOSS

12476738425

11644622530

10978929814

10434272137.27399803907409596337250

9267148544.28578981851666

8732216897.58511950925.2941

83161589508140976656.3158

79833125927840664152.85717710983753.63647592579910.8696

74840430557384189147.6

7292016310

We have decided to go in the market with market price Rs.20 per sachet as it has maximum profit at this stage.

DHA (Upper Class)Sr.# Price House Hold Need Demand

1 16 9169875000 573117187.52 18 9169875000 5094375003 20 9169875000 4584937504 22 9169875000 4168125005 24 9169875000 3820781256 26 9169875000 3526875007 28 9169875000 3274955368 30 9169875000 3056625009 32 9169875000 286558594

10 34 9169875000 26970220611 36 9169875000 25471875012 38 9169875000 24131250013 40 9169875000 22924687514 42 9169875000 21833035715 44 9169875000 20840625016 46 9169875000 19934510917 48 9169875000 191039062.518 50 9169875000 18339750019 52 9169875000 17634375020 54 9169875000 169812500

Total Demad 5953998051

Wapda Town (Middle Upper Class)Sr.# Price House Hold Need Demand

1 16 7568870400 4730544002 18 7568870400 4204928003 20 7568870400 3784435204 22 7568870400 3440395645 24 7568870400 3153696006 26 7568870400 2911104007 28 7568870400 2703168008 30 7568870400 2522956809 32 7568870400 236527200

10 34 7568870400 22261383511 36 7568870400 210246400

Assumptions For DHA(Upper Class)

Average Income= 1,000,000Percentage of Spendings on Coffee= 8.25%Agregate Spending on Coffee= 8.25% of 1,000,000=82,500DHA population is 5.7% of Lahore's Population= 5.7% of 7800000= 444,600Family Type= Nuclear FamilyFamily Members= 4 (approx)Number of Residence= 444,600/4= 111,150Demand Estimation= 82,500*111,150= / Price Per Unit

Assumptions For Wapda Town(Middle Upper Class)

Average Income= 800,000Percentage of Spendings on Coffee= 7.98%Agregate Spending on Coffee= 7.98% of 800,000=63,840Wapda Town population is 7.6% of Lahore's Population= 7.6% of 7800000= 592,800Family Type= Partial Nuclear FamilyFamily Members= 5 (approx)Number of Residence= 592,800/5= 118,560Demand Estimation= 63,840*118,560= / Price Per Unit

Class DistributionsUpper Class

Middle Upper ClassMiddle Lower ClassLower Upper ClassLower Middle Class

Area Under StudyDHA LahoreWapda TownIqbal Town

MuzangMughal Pora

12 38 7568870400 19918080013 40 7568870400 18922176014 42 7568870400 18021120015 44 7568870400 17201978216 46 7568870400 16454066117 48 7568870400 15768480018 50 7568870400 15137740819 52 7568870400 14555520020 54 7568870400 140164267

Total Demand 4914466076

Iqbal Town (Middle Lower Class)Sr.# Price House Hold Need Demand

1 16 6793800000 4246125002 18 6793800000 3774333333 20 6793800000 3396900004 22 6793800000 3088090915 24 6793800000 2830750006 26 6793800000 2613000007 28 6793800000 2426357148 30 6793800000 2264600009 32 6793800000 212306250

10 34 6793800000 19981764711 36 6793800000 18871666712 38 6793800000 17878421113 40 6793800000 16984500014 42 6793800000 16175714315 44 6793800000 15440454516 46 6793800000 14769130417 48 6793800000 14153750018 50 6793800000 13587600019 52 6793800000 13065000020 54 6793800000 125811111

total Demand 4411213017

Muzang (Lower Upper Class)Sr.# Price House Hold Need Demand

1 16 1921920000 1201200002 18 1921920000 1067733333 20 1921920000 960960004 22 1921920000 873600005 24 1921920000 800800006 26 1921920000 739200007 28 1921920000 686400008 30 1921920000 640640009 32 1921920000 60060000



Assumptions For Iqbal town(Middle Lower Class)

Average Income= 650,000Percentage of Spendings on Coffee= 5,5%Agregate Spending on Coffee= 5.5% of 650,000=32,500Iqbal Town population is 13.4% of Lahore's Population= 13.4% of 7800000= 1,045,200Family Type= Partial Nuclear FamilyFamily Members= 5 (approx)Number of Residence= 1,045,200/5= 209,040Demand Estimation= 32,500*209,040= / Price Per Unit

Assumptions For Muzang(Lower Upper Class)

Average Income= 350,000Percentage of Spendings on Coffee= 4.8%Agregate Spending onCoffee= 4.8% of 350,000=16,800Muzang population is 8.8% of Lahore's Population= 8.8% of 7800000= 686,400Family Type= Joint FamilyFamily Members= 6 (approx)Number of Residence= 686,400/6=114,400Demand Estimation= 16,800*114,400= / Price Per Unit

10 34 1921920000 56527058.8211 36 1921920000 53386666.6712 38 1921920000 50576842.1113 40 1921920000 4804800014 42 1921920000 4576000015 44 1921920000 4368000016 46 1921920000 41780869.5717 48 1921920000 4004000018 50 1921920000 3843840019 52 1921920000 3696000020 54 1921920000 35591111.11


Mhugal Pora (Lower Middle Class)Sr.# Price House Hold Need Demand

1 16 261300000 163312502 18 261300000 14516666.673 20 261300000 130650004 22 261300000 11877272.735 24 261300000 108875006 26 261300000 100500007 28 261300000 9332142.8578 30 261300000 87100009 32 261300000 8165625

10 34 261300000 7685294.11811 36 261300000 7258333.33312 38 261300000 6876315.78913 40 261300000 653250014 42 261300000 6221428.57115 44 261300000 5938636.36416 46 261300000 5680434.78317 48 261300000 544375018 50 261300000 522600019 52 261300000 502500020 54 261300000 4838888.889


Total Company DemandSr # Area Demand

1 DHA 79470507472 Wapda Town 65595438503 Iqbal Town 58878308994 Muzang 11586436745 Mhugal Pora 157526636

Company Demand 21710595806



Assumptions For Mhughal Pora(Lower Middle Class)

Average Income= 150,000Percentage of Spendings on Coffee= 2%Agregate Spending onCoffee= 2% of 150,000= 30000Muzang population is 10.9% of Lahore's Population= 6.7% of 7800000=522,600Family Type= Joint FamilyFamily Members= 6 (approx)Number of Residence= 522,600/6=87,100Demand Estimation= 3,000*87,100= / Price Per Unit

Assumptions For DHA(Upper Class)

Average Income= 1,000,000Percentage of Spendings on Coffee= 8.25%Agregate Spending on Coffee= 8.25% of 1,000,000=82,500DHA population is 5.7% of Lahore's Population= 5.7% of 7800000= 444,600Family Type= Nuclear FamilyFamily Members= 4 (approx)Number of Residence= 444,600/4= 111,150Demand Estimation= 82,500*111,150= / Price Per Unit



Area Under StudyDHA LahoreWapda TownIqbal Town

MuzangMughal Pora



Assumptions For Iqbal town(Middle Lower Class)

Average Income= 650,000Percentage of Spendings on Coffee= 5,5%Agregate Spending on Coffee= 5.5% of 650,000=32,500Iqbal Town population is 13.4% of Lahore's Population= 13.4% of 7800000= 1,045,200Family Type= Partial Nuclear FamilyFamily Members= 5 (approx)Number of Residence= 1,045,200/5= 209,040Demand Estimation= 32,500*209,040= / Price Per Unit





Assumptions For Mhughal Pora(Lower Middle Class)

Average Income= 150,000Percentage of Spendings on Coffee= 2%Agregate Spending onCoffee= 2% of 150,000= 30000Muzang population is 10.9% of Lahore's Population= 6.7% of 7800000=522,600Family Type= Joint FamilyFamily Members= 6 (approx)Number of Residence= 522,600/6=87,100Demand Estimation= 3,000*87,100= / Price Per Unit

Coffee Drinkers Age Distribution (DHA)Sr #` Ages Percentage of Coffee drinkers Population of DHA

1 18-25 16% 444,6002 36-35 22% 444,6003 36-45 30% 444,6004 46-55 39% 444,6005 56-above 40% 444,600

TOTAL DEMAND

Coffee Drinkers Age Distribution (Wapda Town)Sr #` Ages Percentage of Coffee drinkers Population of Wapda Town

1 18-25 18% 592,8002 36-35 15% 592,8003 36-45 13% 592,8004 46-55 9% 592,8005 56-above 9% 592,800

TOTAL DEMAND

Coffee Drinkers Age Distribution (Iqbal Town)Sr #` Ages Percentage of Coffee drinkers Population of Wapda Town

1 18-25 20% 1,045,2002 36-35 16% 1,045,2003 36-45 12% 1,045,2004 46-55 4% 1,045,2005 56-above 7% 1,045,200

TOTAL DEMAND

Coffee Drinkers Age Distribution (Muzang)Sr #` Ages Percentage of Coffee drinkers Population of Wapda Town

1 18-25 4% 686,4002 36-35 5% 686,4003 36-45 6% 686,4004 46-55 4% 686,4005 56-above 4% 686,400

TOTAL DEMAND

Coffee Drinkers Age Distribution (Mughal Pura)Sr #` Ages Percentage of Coffee drinkers Population of Mhughal Pura

1 18-25 2% 522,6002 36-35 1% 522,6003 36-45 4% 522,600

4 46-55 6% 522,6005 56-above 2% 522,600

TOTAL DEMAND

Coffee Drinkers Age Distribution (DHA)No of Coffee Drinkeres Willing to Try new Coffee of existing drinkers Estimated Demand

71136 10% 7113.697812 8% 9781.2

133380 20% 13338173394 9% 17339.4177840 23% 17784

TOTAL DEMAND 65356.2

Coffee Drinkers Age Distribution (Wapda Town)No of Coffee Drinkeres Willing to Try new Coffee of existing drinkers Estimated Demand

94848 20% 9484.8130416 18% 13041.6177840 19% 17784231192 30% 23119.2237120 10% 23712


Coffee Drinkers Age Distribution (Iqbal Town)No of Coffee Drinkeres Willing to Try new Coffee of existing drinkers Estimated Demand

167232 7% 16723.2229944 9% 22994.4313560 8% 31356407628 5% 40762.8418080 4% 41808


Coffee Drinkers Age Distribution (Muzang)No of Coffee Drinkeres Willing to Try new Coffee of existing drinkers Estimated Demand

109824 7% 10982.4151008 8% 12080.64205920 10% 41184267696 12% 24092.64274560 5% 63148.8


Coffee Drinkers Age Distribution (Mughal Pura)No of Coffee Drinkeres Willing to Try new Coffee of existing drinkers Estimated Demand

83616 5% 8361.6114972 4% 11497.2156780 1% 15678

203814 2% 20381.4209040 3% 20904


16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 540

100000000

200000000

300000000

400000000

500000000

600000000

700000000

DHA (UPPER CLASS)

16 20 24 28 32 36 40 44 48 520

20000000

40000000

60000000

80000000

100000000

120000000

140000000

Muzang (Lower Upper Class)

Muzang (Lower Upper Class)

20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 370

5000000000

10000000000

15000000000

20000000000

25000000000

30000000000

MARGINAL COST CURVE

20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 370

5000000000

10000000000

15000000000

20000000000

25000000000

30000000000

MARGINAL COST CURVE

16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 540

50000000100000000150000000200000000250000000300000000350000000400000000450000000500000000

Wapda Town (Middle Upper Class)

16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 540

50000000100000000150000000200000000250000000300000000350000000400000000450000000

Iqbal Town (Middle Lower Class)

16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 540

2000000400000060000008000000

1000000012000000140000001600000018000000

Mhugal Pora (Lower Middle Class)

20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 380

500000000

1000000000

1500000000

2000000000

2500000000

MARKET DEMAND

16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 540

50000000100000000150000000200000000250000000300000000350000000400000000450000000

Iqbal Town (Middle Lower Class)

20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 380

500000000

1000000000

1500000000

2000000000

2500000000

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Economics 1