Base Case Situation: A perfectly commonplace median widget available in the market from Acme Manufacturing retails for $125 and costs $99.50 to manufacture. You the customer would willingly pay $150.00 for this widget.
i) Nadir & Sons, a family owned enterprise, introduces a budget version of the widget retailing for $ 115 for cost conscious buyers. Is Nadir & Sons a “Cost Leader” in the widget market?
j) Give me the upper and/or lower bounds of Willingness-to-pay, Price & Cost that Pinnacle can set (or engineer) to become a Benefit Leader.
k) Give me the upper and/or lower bounds of Willingness-to-pay, Price & Cost that Nadir & Sons can set/aspire to to become a Cost Leader.
l) Pinnacle is a Benefit Leader with cost parity ($ 99.50); what will be their choice of prices (range) to
a. Follow a “share strategy” and
b. Follow a margin strategy