WIL PROJECT CASE STUDY ORIENTATION

Week 11

Applicable VLOs for This Weeks Case Study

7. Compare and contrast various pricing strategies and their effects on sales and profits.

This Weeks Detailed Case Study Information

The hardest decision in any business venture is the pricing decision. Pricing products is tricky, it depends on various factors, and it should ideally lead to profits. In order to set the correct price, various pricing strategies should be analyzed, and product elasticity should be calculated. You will help the company Compare and contrast various pricing strategies and their effects on sales and profits.

Performance Running Company is a company specialized in manufacturing running equipment. You are working as a marketing officer with Performance Running Company. You like your job and you adore your Exceed Running Shoes which are produced by performance Running Company.

It is spring 2021 and the running season has started, you are willing to capitalize on the good weather and generate sales for your company. You are thinking about the appropriate pricing strategy to market this product. You collected the following data to assist you.

- Running shoes current sale price: $76 per pair.

- Direct costs: $35 per pair.

- Overhead and indirect costs: $ 5,000,000.

- Currently the company sells 250,000 pairs of shoes per year.

- This is a normal good.

- A change of 10% in price will increase/decrease revenues by 20%.

- Competitors on average charge $98 for a similar pair of shoes.

- Exceed Running Shoes is a unique product, that offers unique features not available in other products.

You are thinking about the following pricing strategies:

- Price Skimming

- Psychological pricing

- (example $99 instead of $100)

- Bundle pricing

- A pricing strategy of your choice

Youre required to analyze the situation and compare and contrast the above-mentioned pricing strategies. Also, analyze each strategys effect on sales and profits. Finally, you have to select the most appropriate pricing strategy.

(Note: you have to make assumptions in order to calculate the revenues and profits under each strategy. Do not forget to state your assumptions clearly)

Deliverables, Format and Marking Scheme for This Weeks Case Study

Evaluation:

- Comparing and contrasting the above-mentioned pricing strategies (1%).

- Correct calculation of expected revenues and profits under each situation (2%).

- Correct analysis of the situation and selection of the appropriate pricing strategy (2%).

Note: assume any missing information. Clearly state your assumptions in your submissions. Summarize your findings in a two-page word document.