Marketing Simulation: Pricing Strategies

The first factor to consider in pricing is who your demographic is. Grazzi, the competing handbag, is marketing to upper-middle-class, professional working women. How do you want to position the Bien Tote in relation to Grazzi?
YOU CHOSE OPTION 3

Middle-class women, make the glamour and convenience of a Grazzi-style handbag more affordable

You next move on to estimating demand for the new handbags. First, choose if you think Bien Tote will move on a curve for “normal” items—in which demand decreases as the price increases, or the curve for “prestige” items, in which demand and price increase together—at least up to a point.
YOU CHOSE OPTION 1

“Normal” demand curve

Your market researchers tell you that about 80,000 handbags of comparable quality and style to Bien Tote sell every three months. Grazzi’s sales numbers for the past three months are 12,000 bags. What do you think Holden Evan’s goal for Bien Tote sales should be in the first three months?
YOU CHOSE OPTION 2

20,000 bags

You have now considered several factors related to pricing. However, because this is a new product, you consider adjusting the price more in order to help it become profitable. Which is the better way to adjust the pricing?
YOU CHOSE OPTION 2

Market Penetration Pricing: Charge a lower price in order to gain market share.

What is your reason for choosing market-penetration pricing?
YOU CHOSE OPTION 3

The low cost will attract customers to the Bien Tote handbags.

You want the price to be low, yet still be high enough to cover production and delivery while making a profit. How will you achieve this?
YOU CHOSE OPTION 1

Determine the cost of making and selling 20,000 bags and use that as the basis for the cost per unit.

The CEO calls you to her office and tells you that the break-even price is below what Holden Evan would like to charge. What recommendation should you make?
YOU CHOSE OPTION 3

Raise the price, but use the innovative design of Bien Tote along with a creative ad campaign to increase the perceived product value.

You must now choose the retailer you want to sell your new handbag line. Choose the retailer that best suits your pricing strategy.
YOU CHOSE OPTION 3

Graceline, a popular online retailer that is known for selling expensive products at cheaper prices.

The Bien Tote sells well for the first three weeks. Then, actress Natalie Andrews is shown with the bag in People magazine. Sales skyrocket. How should you respond?
YOU CHOSE OPTION 3

Raise the price to take advantage of the celebrity status of the handbags.

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