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
Case study #2. A grocery store has decided to launch a private label yogurt. They have examined customers'perceptions of their product and found through customer surveys that mothers liked the private label product because they perceived it to be less damaging to their children's teeth than the more sugary branded yogurt. They decide the value of this benefit is an additional 50 cents in price However, they lack a name brand among customers and estimate this will deduct 30 cents from the price. They then run store simulations in which customer price sensitivity, competitor reactions and other factors are taken into consideration.After this, they determine their price should be two times more than initially estimated. __ value-based pricing Case Study #3: Your company is introducing a new line of chairs. The chairs are available in 7 different colors and are being produced in China.The per-unit production and distribution costs are 500 per chair, including 200 labor, 150 materials, and 150 in fixed and variable overhead. The company's typical mark-up is double above cost. __ cost pricing
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Case Study #2:
The grocery store is using value-based pricing. They have determined that the perceived benefit of their private label yogurt being less damaging to children's teeth is worth an additional 50 cents in price. However, they also recognize that not having a name brand will deduct 30 cents from the price. After considering customer price sensitivity, competitor reactions, and other factors, they have determined that their price should be two times more than initially estimated.
Case Study #3:
The company is using cost pricing. They have determined the per-unit production and distribution costs for their new line of chairs to be 500 per chair, including 200 for labor, 150 for materials, and 150 for fixed and variable overhead. The company's typical mark-up is double above cost, so they will price the chairs at $1000 each.
The grocery store is using value-based pricing. They have determined that the perceived benefit of their private label yogurt being less damaging to children's teeth is worth an additional 50 cents in price. However, they also recognize that not having a name brand will deduct 30 cents from the price. After considering customer price sensitivity, competitor reactions, and other factors, they have determined that their price should be two times more than initially estimated.
Case Study #3:
The company is using cost pricing. They have determined the per-unit production and distribution costs for their new line of chairs to be 500 per chair, including 200 for labor, 150 for materials, and 150 for fixed and variable overhead. The company's typical mark-up is double above cost, so they will price the chairs at $1000 each.
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