Mr. Asad Ali is the sole proprietor of Regal Electronics. Regal Electronics manufactures several products, one being dessert coolers. For several years, Ali has established his dessert cooler brand to be a high quality product in the mid-level price range. In 1987, the government announced additional taxes that would drive up the price of dessert coolers (and other products). Ambassador, a higher-end competitor of Regal, increased their prices and the lower-end competitors followed. When the tax decision was unexpectedly reversed, Ali was raised with the issue of maintaining the somewhat new price increase (of 65 Rs) or dropping prices down to the original cost of the cooler, 1000 Rs. Ali is faced with the difficult assessment of how …show more content…
Worst case scenario, Ambassador will drop their prices to the original cost of 2200 Rs/ unit. Given Ambassador’s position as industry leader, I would think this in highly unlikely, they have no reason to drop their price. Again, people will pay for their name. Assuming Ambassador keeps their price increase of 100Rs, I would expect most if not all of the competitors to keep theirs also. This price gap between Regal and the 4 (excluding Ambassador) more expensive manufacturers many be enough of a price difference for customers to seriously consider and purchase the Regal brand. There is a small chance that the bottom manufacturers’ prices will fluctuate over 100Rs, if they do, there is a better chance that the prices will be high enough for these customers to make the jump up to Regal. Ali aimed to increase the volume of coolers to 1,500 units a year over the next two to three years (Regal Electrogas: Price leader or price follower, 2008, p. 3). His long term goal was to have the market share, and he saw cash flow as the primary constraint . Depending on the results of the price increase, Ali may have some extra monies laying around to assist in the company growth. Going forward, I would highly recommend that Ali revamp his marketing strategy; he should start by taking the following steps:
1. Find the cost with the risk adjusted benefits for dessert coolers, how much can consumers spend without
Q6: How much production fixed expenses should be allocated to 1 kg of "complete meal"? Give a specific number and your logic to support the
Owens & Minor is a distributor of surgical and medical supplies to hospitals and other health care facilities. Due to changing demand from customers, the company is facing increased operating costs, which has resulted in lower profit margins and even losses. In 1993, O&M recorded an $18 million profit, which was reduced to a loss of $11 million in 1995. The entire industry is experiencing similar difficulties. In an effort to resume profitability, O&M is evaluating alternatives to “cost-plus pricing”. Cost-plus pricing does not reflect the true cost of the services provided by O&M. Customers are demanding more of O&M while
Imagine that you have decided to open a small ice cream stand on campus called "Ice-Campusades." You are very excited because you love ice cream (delicious!) and this is a fun way for you to apply your business and economics skills! Here is the first month's scenario--you order the same number (and the same variety) of ice creams each day from the ice cream suppliers, and your ice creams are always marked at $1.50 each. However, you notice that there are days when ice creams remain unsold but other days when there are not enough ice creams for the number of customers.
Company Q has had a large demand from their customers to provide healthy and organic foods over the last few years. They recently started offering a small variety of health and organic food items, which is a step in the right direction toward being socially responsible. They need to be more attentive to the needs and wants of their customers as it shouldn’t have taken years to bring in these demanded products. When there is a demand for products and the company doesn’t respond to that demand, it’s perceived by the consumers that the company simply doesn’t care about their needs and wants. Bringing in a selection of these products was a good start in satisfying their customers. However, with such a demand for these items, having a small and limited selection is just not enough. Expanding the line of health and organic food items will accomplish two things. First and foremost it will appease the current customers and bring in a new clientele that is health conscious, thus helping to create a healthier community and at the same time increasing sales. The higher margin on the health and organic items coupled with the increase in sales will really boost the overall profit margin of the company. Company Q does need to be sure that they don’t over price these products so as to not push away business due to overpricing.
In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.
In this analysis, we included the overhead expense for 1972-1977 because as the project begins to gain a foothold in the market it will acquire a larger market share and will become a larger portion of General Foods’ overall dessert sales. Also, the agglomerator and excess capacity was charged
7) NCC is considering the purchase of two new dryers(each costs $10000, the cost includes installation cost) and conversion of up to 10 dry berry holding bins (each costs $2000, that includes labor and material cost) so that they can hold water-harvested or dry berries. What are your recommendations? Assume that drivers are paid $12 per hour.
The following is an analysis of the case, Greaves Brewery: Bottle Replenishment. It details the growing beer operation of Greaves Brewery located in the Caribbean island of Trinidad. The purchasing manager for the company, Alex Benson, is uncertain about how many bottles to order from the company’s German glass supplier. His decision is complicated by the possibility of a new bottle design being introduced that would compromise his existing inventory of bottles. Additionally, he is faced with storage limitations and erratic sales, all of which are impacting his decision. He is also concerned about over ordering to avoid issues from an
Nevertheless, the majority of customers are very satisfied with the amount of serving along with the quality of their meal as well as the price paid. The strategy of being a low priced high value added has seen problems due to lack of customers which is affecting the bottom line drastically. This inevitable circumstance has put a hold on operations and started an investigation upon various neighboring competitors and their own strategies.
Price is an important factor in Burberry as price affects the value that costumers perceive they get from buying a product (Jobber & Ellis-Chadwick, 2012). Burberry uses competitive pricing similar to its competitors which produces a psychological effect on Burberry customers (Jacobson, n.d). If Burberry for example lowered its price dramatically then customers may believe the quality has decreased and may presume it’s not worthy to be named a luxury brand. However by being expensive it suggest better quality and desire to sustain its customers as well as making there products seem exclusive.
Is there a way to estimate the cost of services and product to customers such that Stuart’s Branded Foods can be competitive in their market? Use the illustrations of the two customers to demonstrate your approach. What would be the selling price per kit or per cup for each customer?
2. If the department that produces Item 345 was a profit center and if you were the manager of that department, would it be to your financial advantage to lower the price?
The following is an analysis of the case, Greaves Brewery: Bottle Replenishment. It details the growing beer operation of Greaves Brewery located in the Caribbean island of Trinidad. The purchasing manager for the company, Alex Benson, is uncertain about how many bottles to order from the company’s German glass supplier. His decision is complicated by the possibility of a new bottle design being introduced that would compromise his existing inventory of bottles. Additionally, he is faced with storage limitations and erratic sales, all of which are impacting his decision. He is also concerned about over ordering to avoid issues from an off year, impact from
The estimate of total potential market for heater/blower unit is 2737 units and 2737000 units for blankets (see exhibit 1). The direct cost of the heater/blower unit would be $380 and $0.85 per blanket. The initial investment, $500,000, for this system would cover the fixed cost of the company during first year of operation. Based on this basic information and other considerations, the company has to determine its pricing strategy for both