In the case write up must have the Table of contents page and page number for each parts.For the calculations must have both explanation and shows detail math in FIGURE.
MODIFIED CASE WRITEUP: For this case, NO NEED for Background or SWOT. Only need the following: (1) RECOMMENDATIONS; (2) RATIONALE; (3) EXHIBITS OF YOUR REQUIRED CALCULATIONS.
For those 3 things
should be clear that you are faced with a pricing decision in this
case. Check the formula under the case reading. Change the number(e.g: how many seminars, how many salesforce, the price basic on Markup, ROI…how long need for payback(1-4 years…)) Use those formula and massage different numbers. Try to find the most logic decision! and shows the Exhibit (graph). Also all of them require explain for calculations.
Background:
You are first on the market with what is literally a life saving
medical breakthrough – although you do know that there are more
breakthroughs to come (e.g., drug eluting stents) within a relatively
short time frame. Your analysis must consider a variety
of ways that you might arrive at a price for the cardiac stent and,
then, choose the one price structure that makes the most sense to you.
While
one can consider the above from a philosophical, strategic viewpoint,
one must first understand the costs and the various pricing methods that
will enable one to arrive at a diverse range of prices from which to
choose. That is, which price has the best chance of maximizing profits
while satisfying sales growth in the category?
Therefore, in
order to proceed, consider the following when making your
recommendations and explaining the rationale behind those
recommendations.
1. Do you think a separate sales force should be established by Cook to sell its new stent?
If so, how will that effect cost – quantitatively.
For
example: 35 people used by Cook on salesforce for diagnostic each of
them cost $45000 per year. You can chose the number of salesforce you
need to make bring into sales the new stents. Also in the reading we see
9000 cardiologists in the US, but required between one to three
seminars per month needed for a year, each seminar cost $8000. However,
after 1 year they can do in service training class. So think about how
many salesperson you need basic on profit and cost. The sales team can
be mix with old diagnostic sales and new training sells. Calculate the
cost. See what is the best decision. How many use from each group?
2. How many seminars should Cook run to introduce doctors to the new stent?
Example: More seminars means more cost
Note:
Questions 1 and 2 pertain to costs. The decisions you make here will
derive some of the cost factors that you will use when doing your
calculations.
3. What do the following pricing methods indicate the price for Cook’s stent to be?
NOTE: Show the relevant calculations in your analysis of each method.
a. Use a simple mark-up on cost method to arrive at a number of prices. Be sure to test each price with a breakeven analysis
to see if the number of units needed to breakeven at that price is
logical based on the facts in the case. That is, how long will it take
Cook to payback its investment based on each price tested?
b. What price is suggested by using ROI pricing; that is, stating a ROI percentage to arrive at a price?
c. Does market skimming (AKA price skimming) make sense here, and, if so, what price do you arrive at?
d. What prices are suggested by demand and value pricing methods? Does such an approach make sense for the situation in which Cook finds itself?
Write Up Layout:
1.Table of contents page and page number for each parts
2. (1) RECOMMENDATIONS
should
be clear that you are faced with a pricing decision in this case. Check
the formula under the case reading. Change the number(e.g: how many
seminars, how many salesforce, the price basic on Markup, ROI…how long
need for payback(1-4 years…)) Use those formula and massage different
numbers. Try to find the most logic decision!
–
Do you think a separate sales force should be established by Cook to
sell its new stent? If so, how will that effect cost – quantitatively.
– How many seminars should Cook run to introduce doctors to the new stent?
– What do the following pricing methods indicate the price for Cook’s stent to be?
1 simple mark-up on cost method to arrive at a number of prices
2 using ROI pricing
3 AKA price skimming
4 Demand and value pricing methods
3. (2) RATIONALE
a.
Use a simple mark-up on cost method to arrive at a number of prices. Be
sure to test eachprice with a breakeven analysis to see if the number
of units needed to breakeven at that price is logical based on the facts
in the case. That is, how long will it take Cook to payback its investment based on each price tested?
b. What price is suggested by using ROI pricing; that is, stating a ROI percentage to arrive at a price?
c. Does market skimming (AKA price skimming) make sense here, and, if so, what price do you arrive at?
d. What prices are suggested by demand and value pricing methods? Does such an approach make sense for the situation in which Cook finds itself?
4. (3) EXHIBITS OF YOUR REQUIRED CALCULATIONS.
Word limit is not a criteria, the answer should be precise and upto the point answering every of the questions.
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