Market-Based Management 6th Edition by Roger Best

Exercise 20

The four interactive marketing performance tools and the application exercises outlined here will add to your understanding of value-based pricing, pricing strategies, price elasticity and break-even analysis. To access the tools, go to www.MBM-BEST.com. For the questions, you can enter the data presented to obtain the answers. You may also enter other data to see the results, and you can save your work. The figure numbers in parentheses are related examples in Chapter 8, but the lettered instructions pertain to the online exercises.
Price-Volume Pricing (Figures 8-23 to 8-25)
A. The price elasticity for personal computers is estimated to be ?2. For the PC manufacturer shown, evaluate the sales and profit impact of a 10 percent price increase and a 10 percent price decrease.
B. For each pricing strategy, determine the break-even market share and discuss the profit risk associated with it.