Pricing Strategy Seminar Case PDF

Preview

Summary

Download Pricing Strategy Seminar Case PDF

Description

Pricing Decisions – In-class Activity 3% Group Names: ______________________________________________________________________ ______________________________________________________________________ A fashion brand known for casual dresses, is launching a new product line: Carry Tu, a line of women's fashion bags. The Carry Tu line will include a satchel, an overnight bag, a laptop bag, and a card-holder keychain. The Carry Tu line will compete with Grazzi, a popular brand of bags. The Carry Tu bags are stylish, but functional, with multiple compartments for holding things. The bags' materials are all-natural and plant-based. It has been decided the target market for the Carry Tu bags will be eco-conscious millennial women. The product development team worked with Karen Kliff, a well-known wedding dress designer, to design the bags' look. Her designs were made popular by an Internet video blogger, with over 1 million followers, who wore a Karen Kliff gown when she got married. The sale of women's bags has seen an uptick in recent years, and consumers are willing to spend discretionary money on higher-end fashionable bags. The interest in environmentalism, vegetarianism and veganism has also increased, making a plant-based line of bags which are also fashionable, a strong brand positioning. Grazzi, the clear market leader with about 20% market share, offers dozens of product items, including a comparable satchel, overnight bag, laptop bag, and card-holder keychain. Grazzi uses soft leather to manufacture its products but has not worked with any famous designers. As a junior marker you must recommend to the marketing team the appropriate pricing strategies for the new bags. 1. Discuss any 2 key factors that must be assessed when determining what price to charge for the line of fashion bags. Some factors might include weather or not the bag is made out of specific luxury type material which you would charge a higher end price for and also where you business is located as if it is located in a higher end area you can then charge a higher price. 2. Do you think a price skimming or a price penetration strategy is most effective to enter the market with the new Carry Tu bags? Consider the pros and cons and make a recommendation on which strategy should be used. I would recommend that the most effective strategy is price skimming as they have 20% of the market share why not have a high profit margin 3. If Carry Tu satchels are sold for $280 per bag, the cost to produce each bag is $87 per unit, the fixed costs are $300,000, what is the break-even point in units? In dollars? The BEP for units is 1,554 The BEP in $ is 435,223.16

4. After three years on the market, the Carry Tu line has established itself in the market, and all four product items are experiencing steady market growth. The competitor, Grazzi, has seen slow market growth. In response, Grazzi decides to cut prices by 10%. The Grazzi satchel, overnight bag, laptop bag, and card-holder keychain are now cheaper than the corresponding Carry Tu bags. What should you do? Continue to offer the same price but have promotions like buy one get one half off to increase units sold to get to more customers....