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This assignment is aimed at strengthening your understanding ofPricing Strategy and Tacticswith a specific focus on identifying the market factors that arerelevant to the pricing adjustment

Conduct a Pricing Analysis and prepare a Discussion Postsummarizingyour analysis. Your Discussion Post should be approximately 250-300 words in length (use the MS Word Count feature)

© 2020 Rajiv Kashyap, Ph.D. Technical Note: Pricing© Pricing Strategy: Discuss price strategy in terms of marketing objectives (e.g., market penetration, new product development, market development, and diversification) and proposed changes in pricing (short versus long term) for different segments, product lines, brands, or services. Investigate and provide recommendations about initial prices (new customers or existing customer buying products not purchased before), and price adjustments. What is the long-term pricing strategy for the product and the company? Describe and justify your pricing approach in terms of orientation (i.e., customer, competitor, sales, or profit). Develop a table per template below and elaborate cells with text description below the table. Note that the numbers in cells below are for illustration purposes only! Value Capture (Customer Focus) Customer Segment Marketing objective Initial Price as % of List Price Price adjustments (period) New customer (referral) Market development 95% 90% (3 months) New customer (e- commerce) Market Development 90% 85% (6 months) Existing Customer (existing product line) Market penetration 85% 80% (2 months) … Pricing Tactics: Describe your pricing tactics to communicate and capture the value of your product. How will you use discounts and markups1 to capture value? Develop a table per template below and elaborate cells with text description below the table. Note that the numbers in cells below are for illustration purposes only! Value Capture (Product focus) Product Line Pricing strategy Initial Price as % of List Price Price Adjustments (period) NNN (new product < 6 months old) premium pricing 120% 100% (6 months) abc (top 10% in abc analysis of sales) volume discounts 90% none ooo (bottom 20% in abc analysis of sales) price bundling - 90% (3 months) … 1 see the appendix for an explanation of how markups and discounts are computed. © 2020 rajiv kashyap, ph.d. appendix: markups and discounts markups: a markup is defined as the amount (expressed in dollar or percentage terms) added to the cost of goods sold (cogs hereafter) to arrive at the selling price. note that markups may be computed on cost or selling price. selling prices to be determined on the basis of markups on cogs are relatively easy to determine. for instance, assume that as a manufacturer our cogs is $100 and we would like to markup the goods by 20% for the jobber. then the selling price is simply $100 + 20% of $100 = $120. when the goal is to determine selling price with a markup on the cost, it is determined as selling price = cogs + markup% x cogs i.e., markup % (on cogs) = selling price – cogs -------------------------- cogs however, determining the selling price when the markup is on the basis of selling price is a little different. given the same situation, assume that we want to determine the selling price inclusive of a markup of 20%. assuming cogs is still $100, this means that $100 is really only 80% of the selling price. therefore, the selling price would be ($100 / 80%) = $125. in other words, when the goal is to determine selling price inclusive of a markup, it is determined as selling price = cost price -------------- (1 – markup %) or, markup % (on sales) = selling price - cost of goods sold ------------------------------------------- selling price discounts: a discount is defined as a reduction in price given to the buyer for performing some activity that is favorable to the seller. assume that the selling price for each unit is $100, then a 20% discount would mean that the agent gets a discount of 20% of $100 from the manufacturer, i.e. = $20 and the manufacturer’s selling price to the agent is $80. therefore, selling price to agent = selling price – (discount % x selling price) given a channel structure of trade discounts as 40/10/5, (retailer, wholesaler, jobber), let’s determine the manufacturer’s selling price when the selling price is $100. $100 x (0.4) = $40 (retailer margin), so cost price to retailer is ($100-$40) = $60 $60 x (0.1) = $6 (wholesaler margin), cost to wholesaler is ($60-$6) = $54 $54 x (0.05) = $2.70 (jobber margin), cost to jobber is ($54-$2.70) = $51.30 therefore, manufacturer’s selling price is $51.30 6="" months="" old)="" premium="" pricing="" 120%="" 100%="" (6="" months)="" abc="" (top="" 10%="" in="" abc="" analysis="" of="" sales)="" volume="" discounts="" 90%="" none="" ooo="" (bottom="" 20%="" in="" abc="" analysis="" of="" sales)="" price="" bundling="" -="" 90%="" (3="" months)="" …="" 1="" see="" the="" appendix="" for="" an="" explanation="" of="" how="" markups="" and="" discounts="" are="" computed.="" ©="" 2020="" rajiv="" kashyap,="" ph.d.="" appendix:="" markups="" and="" discounts="" markups:="" a="" markup="" is="" defined="" as="" the="" amount="" (expressed="" in="" dollar="" or="" percentage="" terms)="" added="" to="" the="" cost="" of="" goods="" sold="" (cogs="" hereafter)="" to="" arrive="" at="" the="" selling="" price.="" note="" that="" markups="" may="" be="" computed="" on="" cost="" or="" selling="" price.="" selling="" prices="" to="" be="" determined="" on="" the="" basis="" of="" markups="" on="" cogs="" are="" relatively="" easy="" to="" determine.="" for="" instance,="" assume="" that="" as="" a="" manufacturer="" our="" cogs="" is="" $100="" and="" we="" would="" like="" to="" markup="" the="" goods="" by="" 20%="" for="" the="" jobber.="" then="" the="" selling="" price="" is="" simply="" $100="" +="" 20%="" of="" $100="$120." when="" the="" goal="" is="" to="" determine="" selling="" price="" with="" a="" markup="" on="" the="" cost,="" it="" is="" determined="" as="" selling="" price="COGS" +="" markup%="" x="" cogs="" i.e.,="" markup="" %="" (on="" cogs)="Selling" price="" –="" cogs="" --------------------------="" cogs="" however,="" determining="" the="" selling="" price="" when="" the="" markup="" is="" on="" the="" basis="" of="" selling="" price="" is="" a="" little="" different.="" given="" the="" same="" situation,="" assume="" that="" we="" want="" to="" determine="" the="" selling="" price="" inclusive="" of="" a="" markup="" of="" 20%.="" assuming="" cogs="" is="" still="" $100,="" this="" means="" that="" $100="" is="" really="" only="" 80%="" of="" the="" selling="" price.="" therefore,="" the="" selling="" price="" would="" be="" ($100="" 80%)="$125." in="" other="" words,="" when="" the="" goal="" is="" to="" determine="" selling="" price="" inclusive="" of="" a="" markup,="" it="" is="" determined="" as="" selling="" price="Cost" price="" --------------="" (1="" –="" markup="" %)="" or,="" markup="" %="" (on="" sales)="Selling" price="" -="" cost="" of="" goods="" sold="" -------------------------------------------="" selling="" price="" discounts:="" a="" discount="" is="" defined="" as="" a="" reduction="" in="" price="" given="" to="" the="" buyer="" for="" performing="" some="" activity="" that="" is="" favorable="" to="" the="" seller.="" assume="" that="" the="" selling="" price="" for="" each="" unit="" is="" $100,="" then="" a="" 20%="" discount="" would="" mean="" that="" the="" agent="" gets="" a="" discount="" of="" 20%="" of="" $100="" from="" the="" manufacturer,="" i.e.="$20" and="" the="" manufacturer’s="" selling="" price="" to="" the="" agent="" is="" $80.="" therefore,="" selling="" price="" to="" agent="Selling" price="" –="" (discount="" %="" x="" selling="" price)="" given="" a="" channel="" structure="" of="" trade="" discounts="" as="" 40/10/5,="" (retailer,="" wholesaler,="" jobber),="" let’s="" determine="" the="" manufacturer’s="" selling="" price="" when="" the="" selling="" price="" is="" $100.="" $100="" x="" (0.4)="$40" (retailer="" margin),="" so="" cost="" price="" to="" retailer="" is="" ($100-$40)="$60" $60="" x="" (0.1)="$6" (wholesaler="" margin),="" cost="" to="" wholesaler="" is="" ($60-$6)="$54" $54="" x="" (0.05)="$2.70" (jobber="" margin),="" cost="" to="" jobber="" is="" ($54-$2.70)="$51.30" therefore,="" manufacturer’s="" selling="" price="" is="">

Answered Same DayJun 07, 2021

· Market penetration: penetration of the market may be regarde

· New Product Development: A new product development strategy is a method of mitigating risk in the creation of a product concept, improving the match between products and markets, overhauling a product line, and increasing sales of current goods by upgrading them (with an emphasis on...

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