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to increase the price as long as demand is steady or increasing. However, you are worried about the effect that pricing might have on the market mix, as lower-income consumers who have The Situation You are the sales manager for Que, Inc., a new pharmaceuti- cal company that has recently purchased the license to sell an allergy medicine that comes in a unique dispenser. Before the acquisition of the license, the product, called PediPlume, sold for $10 per dose, but the owner and CEO of the company, Betty Scheckt, has increased the price to $40 over the past year with no noticeable decline in demand. In fact, due to a new law that requires the presence of such a device in every public school, Scheckt is predicting an increase in demand and is asking you to increase the price by another 15 percent. In addition, the only other real competitor just pulled their product off the market, so Que now commands a 90 percent market share. Scheckt is cer- tain the market will bear the new price and intends to continue increasing the sales price until the market reaches equilibrium- the point at which supply and demand are equal. relied on an inexpensive, critical drug are now priced out of the market. Profits are soaring and the CEO is paid a bonus on prof- its, having earned over $92 million last year. In addition, her father was a major sponsor of the bill requiring the product in schools. Scheckt has called a meeting for tomorrow morning to discuss the price increase. QUESTIONS TO ADDRESS 5-21. What areas of management functions are involved in this scenario? What skills? What strategies? 5-22. What are the ethical issues in this situation? 5-23. What is the logical, business-based approach for a man- ager to take in this situation? Explain your position. 5-24. What would you do, and why? 5-25. How would you describe the culture of this company, based on the limited information in the scenario? The Dilemma Recalling that in the free-market system, equilibrium price is the ideal balance between supply and demand, and it is consumer behavior that determines the equilibrium point, it makes sense to increase the price as long as demand is steady or increasing. However, you are worried about the effect that pricing might have on the market mix, as lower-income consumers who have The Situation You are the sales manager for Que, Inc., a new pharmaceuti- cal company that has recently purchased the license to sell an allergy medicine that comes in a unique dispenser. Before the acquisition of the license, the product, called PediPlume, sold for $10 per dose, but the owner and CEO of the company, Betty Scheckt, has increased the price to $40 over the past year with no noticeable decline in demand. In fact, due to a new law that requires the presence of such a device in every public school, Scheckt is predicting an increase in demand and is asking you to increase the price by another 15 percent. In addition, the only other real competitor just pulled their product off the market, so Que now commands a 90 percent market share. Scheckt is cer- tain the market will bear the new price and intends to continue increasing the sales price until the market reaches equilibrium- the point at which supply and demand are equal. relied on an inexpensive, critical drug are now priced out of the market. Profits are soaring and the CEO is paid a bonus on prof- its, having earned over $92 million last year. In addition, her father was a major sponsor of the bill requiring the product in schools. Scheckt has called a meeting for tomorrow morning to discuss the price increase. QUESTIONS TO ADDRESS 5-21. What areas of management functions are involved in this scenario? What skills? What strategies? 5-22. What are the ethical issues in this situation? 5-23. What is the logical, business-based approach for a man- ager to take in this situation? Explain your position. 5-24. What would you do, and why? 5-25. How would you describe the culture of this company, based on the limited information in the scenario? The Dilemma Recalling that in the free-market system, equilibrium price is the ideal balance between supply and demand, and it is consumer behavior that determines the equilibrium point, it makes sense
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Related Book For
Business
ISBN: 978-0133354263
8th Canadian Edition
Authors: Ricky Griffin, Ronald J.Ebert , Frederick Starke, Melanie Lang, George Dracopoulos
Posted Date:
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