...pricing methods on various websites even for goods and services sold at posted prices. 2) Introduction The pricing issue we have chosen to investigate is that of dynamic vs. fixed pricing of products and services on the internet. Prior to the introduction of e-commerce, products and services were distributed through brick-and-mortar stores with fixed prices. However, many online websites are now offering variable pricing methods for the exact same products. Consumers are now able to have much more control over the prices of these online goods and services. With a typical brick-and-mortar store or online store, the price is set by suppliers to meet the average consumers’ willingness to pay, in order to maximize profit. One of the main advantages associated with a set retail price is reliability. Consumers can make a decision to purchase the product at the current price, and they have a sense of security that the product will be available at the set price. With the introduction of e-commerce suppliers are now able to sell their products to much larger markets across the world and are no longer restricted by geographical limitations. This creates a greater price competition and allows consumers access to certain goods and services that may not have been available to the previously E-commerce and dynamic pricing provides the consumer with a greater sense of power and control to set their own price, on an individual basis. Prime examples of this scenario, is the online auction...
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...4550 MAY 5, 2010 JOHN A. QUELCH LISA D. DONOVAN Flare Fragrances Company, Inc.: Analyzing Growth Opportunities It was early December 2008, time for Flare Fragrances Co. to launch its final analysis of 2009 strategic initiatives, and the group of 10 sales and marketing employees in the main Flare conference room could see by the look on her face that CEO Joely Patterson was determined to make 2009 better than 2008 had been. The economic crisis had taken its toll on Flare’s businesses. Back in 2007, sales had risen 12%; now, less than a year later, the CFO’s estimated year-end numbers projected only 2% growth in 2008—a better recession story than some businesses had to tell, but not a trend that Patterson or the company founders wanted to see repeated in the coming year. “I congratulate you for surviving in a tough economic climate, and I thank you for your hard work,” Patterson told the group. “Good as we were, now we have to be better. We are here to discuss the study that our consulting group, Arlmont Associates, submitted on Monday. As you have read, Arlmont suggested that several strategic options offer the greatest potential for growth. At this point I favor the two that Arlmont viewed as most promising: one, increase our efforts in the drug store channel; two, introduce a new perfume brand. Today, we begin to analyze our options intensively. We can do one, both, or neither. But if we do neither, we have to identify some other idea that can deliver...
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...stores. Product manager Erica Kane recently raised the suggested retail price on a popular line of mascara products from $9 to $12 following increases in the costs of labor and materials. Unfortunately, sales dropped sharply from 16,200 to 9,000 units per month. In an effort to regain lost sales, Enchantment ran a coupon promotion featuring $5 off the new regular price. Coupon printing and distribution costs totaled $500 per month and represented a substantial increase over the typical advertising budget of $3,250 per month. Despite these added costs, the promotion was judged to be a success, as it proved to be highly popular with consumers. In the period prior to expiration, coupons were used on 40 percent of all purchases and monthly sales rose to 15,000 units. 1. Calculate and interpret the arc price elasticity implied by the initial response to the Enchantment price increase. 2. Calculate the effective price reduction resulting from the coupon promotion. 3. In light of the price reduction associated with the coupon promotion and assuming no change in the price elasticity of demand, calculate and interpret Enchantment’s arc advertising elasticity. 4. Why might true arc advertising elasticity differ from that calculated in item 3? C. To calculate the arc advertising elasticity, the effect of the $2 price cut implicit in the coupon promotion must first be reflected. With just a price cut, the quantity Demanded would rise to 13,000, because: EP= (Q-Q1)/(P2-P1)...
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... Roll No: UEMF15008 Problem’s faced: * Although Tesco has a 26.7% of market share, competitors are always one step behind. * Having the grocer giants (ASDA and Sainsbury’s) that have online delivery services as well as offline retail stores, market was packed and there was an opportunity and need of expansion in other areas. * Retail price Maintenance (RPM) system had restricted Retailers from pricing goods below a price agreed upon with the suppliers. Tesco were not able to compete on price with small retailing outfits. * In 1970, the customer were no longer price conscious and were looking for more costly and luxury merchandise due to which the company had to rethink its pricing strategy. * Tesco found out that around 25% of its customers, who belonged to the high income bracket were defecting to rival Marks & Spencer. * Tesco customers were not happy with in-store stands that displayed candy. These stands attracted children, who forced their parents to buy the candy. Similarly, many customers did not like off-shelf displays that were aimed at fueling impulse purchases. * The price followers in the UK market are about to become aggressive investors in price.With both ASDA and Sainsbury’s committed to price leadership, this could result in a step down in industry profitability. Tesco’s journey and problem’s handled Tesco came up with the Loyalty card scheme in 1995. Prior to that there were initiatives such as * Tradingstamps-These...
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...Income inequality damages growth, OECD warns Chris Giles in London Rising income inequality over the past 30 years has damaged growth rates in rich countries by limiting educational opportunities for poor children, according to research by the OECD, the group of mainly rich nations. The finding that higher inequality harms economic performance mirrors the results of a similar study by the International Monetary Fund earlier this year. But the OECD’s analysis goes further because it concentrates on rich countries and attempts to establish the exact cause of inequality’s harmful effects on growth. The OECD said the research showed governments should focus policy on ensuring poorer children gain better education and the supporting people into employment. As inequality has moved higher up the political agenda in rich countries, there has been a flurry of research papers looking into the link between inequality and growth. Clear conclusions have been difficult to achieve because economic theory is ambiguous and the subject has been plagued by research finding spurious associations in the data rather than meaningful causal relationships. Higher inequality can hinder growth by destroying trust in society, hitting investment in skills and reducing demand growth for goods and services from poorer families who tend to spend more of their incomes. But it also provides greater incentives for people to strive to climb the ladder of opportunity and can provide necessary savings to...
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...increase earning and satisfy shareholders. 2. Using the data in Exhibit 7 on the back of this sheet, answer the following questions, showing only JetBlue’s suggested stock prices in the table format distributed in class. (Do not show your calculations or anything except for JetBlue’s suggested stock prices derived from the multiples on the back of this sheet. (Note: Express all stock prices to two decimal places.) Table 1: Stock Prices Implied by Different Multiples | Airlines | P/E Mult | CF Mult | Total Assets Mult | Revenue Mult | Air Tran | $33.85 | $16.99 | $44.06 | $17.12 | Alaska Air | $38.59 | $19.04 | $31.20 | $13.45 | America West | $31.67 | $20.68 | $25.36 | $20.38 | Midwest | ($10.29) | ($11.18) | $40.71 | $18.91 | Southwest | $18.73 | $15.11 | $35.08 | $19.62 | 3. Which two multiples do you think are the most important to use to find JetBlue’s IPO price? Why? I believe the two most important multiples are the P/E and Cash Flow. The P/E is important because of its wide availability and it uses the earnings per share as a driver. The Cash Flow is important because a lot of analysts believe that cash flows provide a more accurate value of the strength and sustainability of a company. 4. Given your calculations in question #2 above, what price would you, the investment...
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...Martin-Pullin Bicycle Corp. (MPBC), located in Dallas, is a wholesale distributor of bicycles and bicycle parts. Formed in 1981 by cousins Ray Martin and Jim Pullin, the firm’s primary retail outlets are located within a 400-mile radius of the distribution center. These retail outlets receive the order fromMartin-Pullin within two days after notifying the distribution center, provided that the stock is available. However, if an order is not fulfilled by the company, no backorder is placed; the retailers arrange to get their shipment from other distributors, and MPBC loses that amount of business. The company distributes a wide variety of bicycles. The most popular model, and the major source of revenue to the company, is the AirWing. MPBC receives all the models from a single manufacturer overseas, and shipment takes as long as four weeks from the time an order is placed. With the cost of communication, paperwork, and customs clearance inCIUded MPBC estimates that each time an order is placed, it incurs a cost of $65. The purchase price paid by MPBC, per bicycle is roughly 60% of the suggested retail price for all the styles available, and the inventory carrying cost is 1% per month (12% per year) of the purchase price paid by MPBC. The retail price (paid by the customers) for the AirWing is $170 per bicycle. MPBC is interested in making an inventory plan for 2011 The firm wants to maintain a 95% service level with its CUStomers to minimize the losses on the lost orders. The...
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...Priceline Case Study The core components of Priceline's business model: The core components of Priceline's business model are based on reverse auction pricing pattern. This unique pattern offers value for both consumer and vendor. Priceline also acts as an intermediary, buying blocks of airline tickets and vacation packages at a discount and selling them at a reduced retail price or matching its inventory to bidders. It is best known for its Name Your Own Price auctions, where users specify what they are willing to pay for goods or services, and multiple providers bid for their business (Kenneth & Laudon 2011). It helps consumers to find cheaper product and service. On the vendor side, it allows them to sell products they might not otherwise be able to sell. Priceline's business model also is known as brokerage. In this model Pricesline creates its own market by bringing buyers and sellers together. Priceline operates as the broker or middle man to bring both parties in a systematic environment. Priceline receives it’s revenue based on the difference between the “Name your own price” amount entered by the customer and the amount charged by the service provider such as the airline. Will Priceline ultimately succeed or fail? Priceline has a reasonable business model which will allow them to succeed in the long term. The reverse auction model which Priceline uses to link the sellers with buyers is what has made it profitable. There will be allways customers...
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...pg. 88 “posted total retail ….. Gatorade” pg. 89 “…. decide upon a product line.” pg. 90 “…. distribution system supplied both off-premise and on-premise retailers.” 1. How would you characterize the energy beverage category, competitors, consumers, channels, and DPSGs category participation in 2007? * Energy Beverage Numbers 2006 * retail sales * $6.2 Billion * retail product sold * 153 Million cases * past growth * 2001 – 2006: average annual rate of 42.5% * future growth * 2007 – 2011: average annual rate of 10.2% * decrease rate due to * maturity of market * increase competition * hybrid products * price erosion * 2001 – 2006: 30% decline * decrease in price due to * larger packaging sizes that have lower price per ounce * introduction of multi-packs * increased availability in mass merchandisers * Manufacturers with a broad product line and extensive distribution have greatest chance of gaining shelf space with high turnover rates * Competitors * Five dominate with 94% of sales and volume in US market * Red Bull North America * pioneer when it was introduced to the US in 1997 * leader in dollar sales and unit volume * dollar market share * 2000 – 82% * 2006 – 43% * US media expenditures * 2006 – $39.6 million * 2007 – $60.9 million * Hansen Natural Corporation * Monster Energy released in 2002 * distributors aided with increase...
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...(Fredows, K., Lewis, M., Machuca, J., 2005). Compare to Zara, TK Maxx also has a greater range of products which including Men's and Women's clothing, shoes, accessories and handbags. It provides the unique and individual clothing and home wears with limited numbers of products as well. Moreover, the products of TK Maxx have varied in quality and designer reputation. According to TK Maxx website(2013), the buyers in TK Maxx scour the globe 24/7 to bring back the best brands at a fraction of the price. ◆ Price Generally, in order to get the most common average income customers able to purchase the products, Zara set the goal to make the price being available. Zara creates deals by providing small quantity of apparels from the same collection as amount for lower price. Randomly offer discount sale for some basic products. On the other hands, TK Maxx always provides low cost between 20% - 60% recommended retail price. Offer the prices of products for less than usual retail prices. The price range is from £5 up to £200, which reveals the products of gold label would appeals to high income consumers in certain places, and clearance appeals to the lower income people in all stores. ◆ Place As Soloaga and Monjo (2010) found out that Zara use “commercial space” opened 2 or 3 stores in a small area. In order to avoid cannibalization...
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...Use the Internet or the Strayer Library to research a company that is competing in a purely (or perfectly) competitive market. Be prepared to discuss. * Perfectly Competitive Markets: "Market with many buyers and sellers, so that no single buyer OR seller has a significant impact on price...most agricultural markets are close to being perfectly competitive." When you have a product with no distinguishing characteristics, such as corn, then the market ends up setting the price by how much supply is on the market compared to the demand. That means sellers on commodity markets are "price takers." One corn farmer cannot say, that while his corn husk is more expensive, it comes with a sunroof or granite counter tops. Holding the quality of corn constant, there is no difference between corn from one farmer or another. And when it comes to price, if one corn farmer prices his crop below another, he will just sell it all at a lower price than his competitors. Because there are so many suppliers, the lowering of price by one is not enough to lower the overall market price. However, if GM slashes prices on its trucks, then other manufactures will have to respond by either lowering their prices or offering more (in terms of service, features, quality, etc.) in order to keep from losing sales. ...for example. It has nothing to due with barriers to entry,...
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...Pondering Price Promotion On November 6, 2006, the vice president of marketing of Culinarian Cookware (Culinarian), Donald Janus, and the senior sales manager, Victoria Brown, met to discuss whether or not the company should offer a price promotion for the company’s line of premium cookware in the coming year. These two executives had very different views on the value of a price promotion and the role it could play in the company’s marketing strategy. Janus expressed his opinion first: Brown knew that Janus was determined above all else that Culinarian should remain known as a high-quality product and an elite brand—“an American icon” was Janus’s term—and that all good things would flow from that status. He grew wary when he perceived, rightly or wrongly, a hint of a threat to that status. Still, Brown was obliged to be candid. She said: Do No I believe we need to be bolder with our price promotions. The number one complaint that my sale force hears from the trade accounts is the lack of consistent and meaningful price discount events. Providing a 30% discount promotion will increase commitment and support from the trade and will boost our overall brand awareness. It’ll also provide us with new customers who would otherwise not purchase because they feel the suggested retail is too high and encourage current customers to immediately purchase additional pieces. And yes, I think if the data in the consulting study is re-examined, you’ll see the 2004 price promotion...
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...students since it began in 1932. The Show is backed by more than 31,000 volunteers serving on 105 different committees. GENERAL REQUIREMENTS FOR REQUEST FOR QUOTE PRICING Pricing for all goods/services must be very specific, all inclusive and firm. All administrative fees, shipping, expedited delivery costs, labor, etc. must be included in the quote. All transportation, freight, drayage and other charges are to be listed as a separate line item. Based on your line item bid price for shipping on the Price Sheet, the Show may require that product shipments are to be done via Federal Express or UPS, using the Show’s existing account. Moreover, all design work, product set-up, production, repair work, etc. must be done according to the Show’s schedule, which may include weekends, nights and early mornings, at no additional cost to the Show. The Show will pay only for goods/services stated on the Price Sheet unless otherwise agreed to in writing by both parties before the order is placed or work is started. No price changes, additions, or subsequent qualifications will be honored. INTELLECTUAL PROPERTY...
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...Retail Pricing of Pandora * Warranty All Pandora products are covered by a 1-year warranty covering manufacturing defects. * Sales Pandora corporate headquarters dictates the prices and they have a Recommended Retail Price (RRP), most retailers are prohibited from undercutting their prices so the cost is consistent throughout a market/country. The only exception is Denmark because of the countries’ laws prohibiting a company from dictating the price of products. * Pandora prices differ throughout the world Many things go into the Recommended Retail Price for the country, chief among them the cost of the materials, mainly gold used to make the Pandora product which fluctuates a lot. Also, the currency exchange is taken into consideration, and another important factor is taxes – the European Union or United Kingdom charges value added tax, which can make the charms more expensive for these countries than say Singapore. While the retailer is not allowed to discount prices, Pandora can decide to offer gifts with products or promotions that are carried by the individual stores. Because the stores are franchises, they can independently decide whether they will offer the promo or not and also at what price point. This is also different by country because the local office or goverment for the country will determine which GWPs or promos will be offered. * Pricing Strategy Working towards Pandora’s long term vision to become the world’s most recognised jewellery...
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...sells through franchised dealers at a retail price of $12,000. (A truck camper consists of a pick-up truck and a housing cabin. The housing cabin is mounted on the bed of the pick-up truck, just behind the driver’s cabin. Consumers typically use truck campers for driving down to holiday spots like forests, lake sides, sea shores, mountain valleys etc. and camping there for a short holiday in the comfort of the housing cabin).The dealers have been pressuring the company to add a second recreational vehicle to the line at the higher end. In response, the company has designed the High Rise and is about to set its price to dealers and customers, Here are the major facts: 1. The company has enough plant capacity to produce up to five hundred units per year of the new model. Any more than this would require investing in new plant capacity. 2. The fixed costs of producing the High Rise are estimated at $500,000. The direct costs are estimated at $10,000 per unit. 3. There is a major competitor producing a high-quality recreational vehicle retailing for $14,000. The competitor charges its dealers $11,200 - a 20 percent dealer discount off the retail price. The company estimates that the competitor's profit margin is approximately $1,400 per unit. The competitor sells about six hundred units per year. 4. The company would like its High Rise to retail for at least $2,200 more than its Free Spirit. 5. The company displayed the High Rise at the latest retail trade show, and over twothirds of...
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