Price Discrimination
It’s time to crunch some numbers! Your boss has just given you an important, high priority assignment. The company’s core business product has shown steadily shrinking profitability and you’ve been asked to address the problem by coming up with at least one new pricing technique. Your boss and the regional VP of Accounting and Finance will meet with you at the end of the month to hear your proposal.
Prior to the meeting, your boss would like to see a brief memo that outlines your proposal and the impact you expect it to have on units sold and profits. The VP of Accounting and Finance is new to the company, so you’ll also need to include a section that contains a brief description of the product and its background information.
Develop a 2-3 page executive memo for your boss. Include the following:
- Describe the company’s product or service using appropriate economic terminology. Questions to address include, but are not limited to:
- What does your company produce? What utility or benefits does it provide to the consumer? How do consumers use it?
- What is your company’s history with this product or service?
- What does the competition in the market look like for this product or service?
- What actions has your company taken to remain competitive?
- Does your company sell other products or services that could enhance this product or service? How well are they selling?
- Provide one or more specific suggestions for price discrimination.
- Which price discrimination technique(s) will you use?
- In order for your proposal to generate more profits, will you recommend markup or margin pricing? Why?
- What is the current price? What will be the new price?
- How will consumers benefit from your proposal?
3. Explain how implementing your proposal is expected to impact consumer demand.
- How will your proposal impact sales in the first three months?
- How will your proposal impact sales within twelve months?
- What would increased sales enable the company to do differently? Your assignment must follow these formatting requirements:
- Typed, double-spaced, using Times New Roman font (size 12) with one-inch margins on all sides. Check with your professor for any additional instructions.
