Problem:
You are the product manager for a new disposable infant diaper ("Baby High Dry") that absorbs better than any other diaper on the market. Normally, an infant's diaper must be changed eight (8) times in a 24-hour period. Your new diapers must be changed only four (4) times in a 24-hour period (We're making some assumptions here, for final exam purposes. In this example, we are looking at the MATH...).
A comparison of the diaper manufacturing cost is as follows:
"Baby High Dry" diapers cost 40¢ each to manufacture and market. You need to determine a price that you would charge the retail store, as well as a suggested price they should charge their customers.
You estimate competing diapers cost about 25¢ each to manufacture and market. These diapers sell to the retail store for 55¢ each, and they sell them to customers for 75¢ each.
What price would you recommend charging the retail store for your diapers? What would you suggest be the "list price" per diaper to the customer? WHY did you select the prices that you did for "Baby High Dry"
What factors influenced your decision to set the prices that you did to the retailer and to the customer? (Remember that your channel members are in a position to promote your product. As you look at your pricing strategy, how does that strategy consider that which is important to your retailers?)