ABC Cereals Inc

ABC Cereals Inc - Welcome As CEO of ABC Cereals Inc we are...

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Welcome! As CEO of ABC Cereals Inc. we are announcing a new pricing structure to our stockholders and the public at large. The reason being, we have been brought up short by our new legal team, who recognized our pricing at 30% for some and 20% for others is both illegal and immoral. Pricing such as this gradually eliminates smaller stores and chains, which were once in competition with the larger stores and chains (Robinson-Patman Act, 2010). Our legal dynamos demonstrated this through the explanation of, ‘The Robinson-Patman Act (1936) , ‘makes it illegal to discriminate by charging buyers of essentially the same product different prices if those price differences are likely to injure competition’ (Pindyck & Rubinfield, 2009). Recognizing our failure to abide by this and other antitrust laws we are making major changes in our corporation both in personnel and policy. Therefore, we have now adopted a new pricing structure based upon Third Degree Price Discrimination (Pindyck & Rubinfield, 2009). We have determined our customers’ reservation prices, after much market R & D over the past 4 years. The reservation price is the amount customers are willing to spend for our cereals (Pindyck & Rubinfield, 2009). We will call these groups of customers, ‘tiers’. In the past we have had stores sell our products at one price, no
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This note was uploaded on 01/12/2011 for the course MBA 502 taught by Professor Nicolasa.pologeorgis,ph.d. during the Spring '10 term at Jones Intl..

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ABC Cereals Inc - Welcome As CEO of ABC Cereals Inc we are...

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