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A Couple of Squares Pricing for the Future A Case Solution

Solution Id Length Case Author Case Publisher
2655 1249 Words (5 Pages) Dante Pirouz, Raymond Pirouz, Dina Ribbink, Emily Chen Bendle Ivey Publishing : W13065
This solution includes: A Word File A Word File

In 2012, Bernadette Erb, the marketing manager, co-founder, and co-owner of the bakery "A couple of Squares," struggled with the pricing of the bakery's goods. The company had gone through a number of changes over the previous few years, and in 2009, George Gallant, who controlled 60% of the company, requested an equity injection. However, both partners were now aiming to repurchase their share of the business by expanding it and maintaining its sales.

The business's founders also desired to grow it through either internationalization or direct consumer sales. The company needed to grow the business 45% more in order to raise sales revenue to around $ 10,000,000 million in order to meet all of the aforementioned objectives. For the bakery's cash flow and profitability, the company needed to address the pricing issue by creating a new pricing plan. Erd cannot increase prices beyond a certain level because it may lead drastic decrease in sales.

Following questions are answered in this case study solution

  1. Bernadette Erb's used four (4) main factors in their pricing decisions. Explain these four (4) factors.

  2. If Erb and Bradshaw decided not to raise prices, discuss other actions that they could take in response to their circumstances.

Case Analysis for A Couple of Squares Pricing for the Future A Case Solution

1. Bernadette Erb's used four (4) main factors in their pricing decisions. Explain these four (4) factors. 

Bernadette Erb considered the following factors in her pricing decisions:

  • Quality of the product

  • Pricing by the competitor

  • Overhead costs of production

  • Export to the US

She also takes into account factors like demand, input costs for the final product, labor costs, production costs, fluctuations in variable costs, competitor pricing and incentives, retailer's margin, consumer and supplier bargaining power, availability of alternatives and complements, and customs duty, among other things, when selling internationally.

Because consumers frequently judge quality based on price, competitors' higher pricing gives buyers the impression that they are delivering high-quality goods. For them, high price is typically associated with good quality, whereas low price is typically associated with low quality. Additionally, the corporation must include the cost of customs duty and customs clearance in the product's price.

The company frequently suffers losses from US customers who require a customized label or logo on its products, which raises the cost because it must be prepared on various machinery and can cause losses in the event of an error. As a result, demand for the company's products in the US has been steadily declining as a result of the lack of customer trust and confidence to purchase from abroad.

A product with an excessively high price may see a decline in demand. In highly competitive markets like the US, where there are numerous competitors like Eleni's New York, there is a high risk of a decline in demand to extremely low levels. The price tags of the rivals were higher than those of the business. For instance, Eleni's New York, the company's main rival, retails a single cookie for $16, while A Couple of Squares only charges $5.

A Couple of Squares offered high-end goods at higher prices. After the minimum wage was raised, the majority of the company's expenses were related to labor.

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