Reply and challenge the findings of your peers. Can Someone help me with this?
Based on the information obtained in chapters 17 and 18 of the assigned reading, the following is the rational and logistics used to devise a price for the shoe rack that Keating is now trying to market. During the initial strategizing, if the marketing team chose the "Profit-Oriented Objective" as their "Pricing Objectives there's a good chance that they'll meet their goals.
Prior to establishing a price, the team must performed Break-even analysis to evaluate if the firm will be able to break even (pricing will cover all cost). During this analysis focuses will be placed on Break-even points (quantity where cost will equal total revenue). Because of the fact that trials and testing of the market for this product has been performed and using the formula for this equation if 2507 units can be sold between all the hardware, grocery, general merchant stores, wholesales, stores they should break even (targeted market). This is based on the hopes that the shoe rack will account for half of the projected $95K of the division's sales. If negations go through with the local Wal-Mart, sales will also be increased.
Based on the price the shoe racks selling at retail, keeping the completive edge, and to get a reasonable profit without overpricing; the marketing team priced the item at $9.50 per unit (33.7% markup); this price is putting the profit maximization objective in affect. Consideration for this decision is base on the demand known and anticipated and the fact that prices may lead to the expansion to the size of the market and results in greater sales and profits.
Note: this pricing is based on the average production cost of $3.20 and a revenue goal of sales from this product counting for one half of the division's revenues.
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