Short Case Scenario 12-1

Essay

Short Case Scenario 12-1
Bill and Farrah have been recently hired by Superior Stereo Systems, a cutting-edge manufacturer of stereo speakers. Both Bill and Farrah have been assigned to work on two product teams, the Superior V, an existing product, and the Superior VI, a brand new speaker technology. The Super V is reviewing the pricing strategy used to this point. Bill, a recent graduate with a degree in economics, is insistent that they should price the speakers to maximize profits. He explains, "It is basic economics-companies price their products to maximize products. There's no question-this is the strategy that we should take." Farrah, remembering what she learned in her marketing courses, isn't so sure that Bill is on the right track. The technical specifications of the Superior VI speakers have been worked out, but the team is struggling with pricing. Some members of the group think that the speakers should be priced higher than the Superior V, while others are arguing for a lower price.
-In the past,Superior has sold all speakers directly to retailers.They were recently approached by a wholesaler who would like to carry their line of products.Why might they wish to use a wholesaler rather than selling directly to retailers?