Assignment:
PART I: Read Pay What It's Worth
Read "The Customer Experience: Pay What It's Worth" on page 574 of your text. Answer in detail the following questions (at least 1-2 paragraphs each):
• Would this concept work in an upscale restaurant? Why or why not?
• Would this model work in a service business?
• Could this model be applied to other types of businesses? Give an example?
• Do you think this model can continue to work as our economy gets stronger (is it a model that can be successful long-term)?
PART II: Marketing Plan Development (Continued)
For this course, you will be developing a marketing plan for a new product (or service). Each week, you will develop a different part of the marketing plan. The marketing plan will become your final project.
Continue analyzing and developing a marketing plan for the same product that you selected in Module 1. For this week's assignment, you will be determining the price for your product. There will be two parts to the assignment.
1. You will create an Excel spreadsheet that shows how you arrived at the price for your product. You may use any method to determine your price. Click here to use OpenOffice.
2. You will also write a one to two page essay explaining your pricing strategy. Please ensure that you have at least 2 references to the textbook. You may also use other reference materials from LIRN (visit the Academic Resource Center for instructions on how to use LIRN).
For the Excel spreadsheet include: estimated costs (fixed and variable), mark-up, and profits. Compare your product price with the competition's pricing. Determine what your final price will be for the product. You may need to decide the sizes of the product that you will sell and price each one. Show your break-even point. Remember:
Return on investment = Net profits after taxes
Total assets
Retail price = Cost
1 - Desired return on sales
For the written portion of the assignment, please ensure that your paper includes the following topics:
o Supply and demand
o Your pricing objective (profit oriented, sales oriented, or status quo)
o The stages of the life cycle of your product
o Which of the three basic approaches you used: price skimming, penetration pricing, or status quo pricing
o The legality or ethics that affected your decision making
o Whether you will fine tune the price with rebates, discounts, or any of the other methods
Part 2
Directions: Please answer each of the following questions and provide examples from the text, if applicable. Each response should be written in complete sentences and be at least 1-2 paragraphs in length.
1. How does price allocate goods and services?
2. Define the following:
• Elastic demand
• Market share
• Price bundling
• Break-even analysis
• Value based pricing
Part 3
Discussion question choices (pick any 2).
1. Discuss the importance of pricing decisions to the economy and to the individual firm
2. List and explain a variety of pricing objectives
3. Explain in detail the role of demand in price determination
4. Understand the concept of yield management systems