Assume that you are the director of marketing for a company that manufactures candy bars ( Mars

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Question:

Assume that you are the director of marketing for a company that manufactures candy bars (Mars or Snickers, for example). Your boss wants you to increase the price of your candy bars. You are concerned that increasing the price might not be profitable because you are unsure of the demand elasticity of your product.

How could you measure the demand elasticity (price sensitivity) of your candy bars?

What findings from your measurements would make you want to increase the price?

What findings from your measurements would make you not want to increase the price?

You have been hired as the assistant manager of a local grocery store. You notice that there are two different bins/containers for carrots. In one bin/container, the carrots are priced at $1.99/kg, and in the other they are priced at $3.99/kg. The carrots look very similar. You notice that many people are buying the $3.99 carrots.

Why do you think most people in this grocery store are buying the $3.99 carrots?

Give a recommendation for the grocer store's pricing strategy?

Your company sells roasted coffee beans. You are thinking about selling a new product, ground coffee. Your research suggests that consumers would only be willing to buy a 250g bag of ground coffee for $10. You would sell the ground coffee to coffee wholesalers. The wholesalers would then sell to coffee shops, and consumers could then buy your 250g bags of ground coffee at the coffee shop. The coffee shops usually require a 40 percent markup, and the wholesalers require a 30 percent wholesaler markup.

Assuming the coffee shop will sell the bags of ground coffee to the consumer for $10, what will be the price that the coffee shops pays for the coffee?

What price will you (the manufacturer) charge the wholesalers?