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CU Marketing Management What Is the Role of MSRP in Your Pricing Decision Worksheet

 

Please address the questions in the Pricing Assignment for the Marketing Management Class.

Student or Team Name:

Pricing and Margin

Pricing is one of the most complex decisions in marketing because it requires balancing multiple objectives, including cost/margin, positioning in the mind of the consumer, impact on channel/distribution partners, and competition. This assignment is designed to illustrate the effects of the pricing decision in these different contexts.

  1. What is the role of MSRP in your pricing decision?
  2. For each brand in the following table, calculate the manufacturer’s selling price (MSP), the per unit margin, and the gross margin as a percentage of MSP.
  3. For large retailers, the MSP represents their product cost, which they will mark up to set the retail price. If the retailer has a target margin of 25%, what would the retail prices be for the brands in question 2?

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MSRP

Volume Discount

Promotion Allowance

Unit Cost

MSP

Per Unit Margin

Gross Margin %

Brand X

$5.29

30%

15%

$1.18

Brand Y

$4.99

35%

12%

$0.74

Retail Price

Brand X

Brand Y

Continued on next page…

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Student or Team Name:

  1. Many small retailers will buy through a wholesaler instead of buying direct from the manufacturer. Given the pricing policy for Brand X in question 2, what would be the wholesaler’s selling price (WSP) if the wholesaler has a desired margin of 15%?If the retailer has a desired margin of 30%, what would the retail price be?What volume discount would the manufacturer have to offer for the retailer to price at MSRP?
  2. Retailers may use some of the promotion allowance to offer special price promotions. If the retailer uses one-third of the allowance for price promotions, what would the average retail price be for Brand X in question 3?

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