J.C. Penney’s Cost-cutting Transformation

In this mini-case, you will review the efforts of the J.C. Penney department store to more efficiently compete on price, primarily underpinned by a cost-cutting program. But is this the best approach?

 

ACTIVITY/TASK

The J.C. Penney department store chain is currently through a major cost-cutting program, associated with its transformation strategy. The firm’s goal is to cut expenses by … See the full activity...

A Pricing Strategy Success?

In the following case study, your task is to determine whether the firm should continue with its current strategy (which is mainly priced-based) or does it need to adopt a new approach?

 

ACTIVITY/TASK

Credit unions are like small banks that usually only offer services to individual customers (that is, non-businesses). What is unusual about many of them is that they … See the full activity...

Pricing against aggressive competitors

Retailers often face the challenge of deciding between ‘everyday low pricing’ and ‘high-low’ pricing. As suggested by the names, the first approach uses a consistent low pricing approach, where the second approach utilizes higher prices combined with frequent specials/discounts. Your task is to help determine what would be the best pricing approach.

 

ACTIVITY/TASK

Greg:             

At this meeting we need to … See the full activity...

Cost Leadership

One of the key requirements for achieving success as an ongoing price discounter is to create a cost leadership position. That means that the firm has built some cost advantages over their competition.

This activity quickly highlights some of the practices that Aldi Supermarkets (a relatively new discount supermarket in Australia) have adopted to achieve a cost leadership position and See the full activity...

Pricing and Positioning

As part of the marketing mix, pricing is an aspect that can help communicate and reinforce the firm’s positioning. For many consumers, price also acts as a guide to quality. In this activity, there is a key pricing decision to be made in the two situations presented. Keeping in mind the firm’s/brand’s positioning, outline whether these decisions are logical.

 

ACTIVITY/TASKSee the full activity...

How Important is Price?

In this exercise, you are presented with eight product alternatives, as you would find in a supermarket environment. As you will see, price is simply one aspect of the consumer’s perception of value. So review the following list of pasta sauces, which one would you buy?

 

ACTIVITY/TASK

Brand

Positioning/Marketing

Price

A

The leading brand name – heavily advertising on TV

See the full activity...

Making a Price Decision

In this activity, your task is to set the price for a new home-delivered spring water (the large bulk bottles) company. To complicate matters, you have a few different viewpoints on the best pricing approach. What would you decide?

 

ACTIVITY/TASK

Spring water is a product that has become popular over the past 10-15 years or so. During the growth … See the full activity...

Competitive Pricing

Firms need to take care when responding to competitor’s action with a pricing change, as this could trigger a potential price war. Therefore, in this activity you need to identify what would be the most appropriate pricing reaction for the following generic situations actions.

 

ACTIVITY/TASK

  1. To communicate the high quality of your product against a new competitor
  2. The market that
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Value Pricing – A Tough Decision

This activity requires you to determine a price solely based on what value your product generates for the customer. As there are only insignificant variable costs involved, what price would you set?

 

ACTIVITY/TASK

Assume you are the marketing manager for a large sales training company. Over many years, your firm has developed a unique set of sales training techniques. They … See the full activity...

Setting Your Price

Here is a hypothetical situation that you could potentially face in your career. Assume that you decide to start a business as a marketing consultant.  Complete the following activity to determine how much would you charge for your consulting services?

 

ACTIVITY/TASK

A charity organization has approached you to write a marketing plan for them. From your previous market intelligence, … See the full activity...

Price Penetration or Price Skimming?

The following is an excerpt from a manager’s meeting for firm that produces entertainment/game consoles (like PlayStation, Xbox, Wii). They are trying to decide whether to use a price penetration or price skimming strategy in the upcoming launch of their game console. Can you help them decide?

 

ACTIVITY/TASK

Ken:               

Thanks for coming everyone. This is our price setting meeting … See the full activity...

What Price Mark-up is Needed?

Many consumers are surprised at the (profit) margin that some retailers make on their sales. However, they do need fairly large margins to cover their significant rent and staff costs that they incur. In this activity, your task is to determine what average prices will need to be charged by these small retailers so they end up making a good See the full activity...

Price Calculations – Marginal Analysis

Marginal analysis is based on the assumption that as the product’s price alters, so will its level of demand (sales). Therefore, this approach looks for the maximum profit point, when considering the firm’s cost structure and the likely sales at different price points (which is essentially the product’s demand curve). 

 

ACTIVITY/TASK

Determine the best price point (that is, what is … See the full activity...

Price Calculation – Target Profit Pricing

As the term suggests, target profit pricing is designed to determine how many units we will need to sell to both cover costs AND achieve a set profit. In some firms, marketers are allocated a profit contribution goal/target for the year, and they will use this approach to estimate the required sales volume. Work through the following two examples to See the full activity...

Price Calculation – Breakeven Pricing

Often a firm will calculate the break-even point for a price. That is, if we set the price at $X, then how many units will we need to sell to cover costs (that is, our break-even point). Work through the following two examples to gain a better understanding of this approach.

 

ACTIVITY/TASK

Using break-even analysis:

  1. How many units need
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Price Calculation – Cost-plus Pricing

Cost-plus pricing is a very simple form of pricing. This approach was once fairly common, but is less widespread today. Your task for this activity is to work through the following two examples to gain a better understanding of this approach.

 

ACTIVITY/TASK

Using cost-plus pricing to:

  1. Set the price if you expect to sell 1,000 units and you want a
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Pricing Objectives


Pricing decisions will form a key part of the firm’s overall marketing strategy. In this activity, your task is to identify why the firm has adopted their particular pricing approach.

 

ACTIVITY/TASK

  1. When ‘Great Cuts’ (haircuts) originally opened, they charged just $12 per haircut. However, since they have become widespread and more popular, they have progressively increased their price to over
See the full activity...