Cowgirl

1. The suggested retail price and wholesale prices of Cowgirl Chocolates products are displayed in Exhibit 2 (p. 491) along with the product and packaging costs. Based on this information, discuss the relative merits of using a cost-based, demand-based, or competition-based pricing method.

COST-BASED PRICING: This procedure, on the part of Cowgirl Chocolates could be utilized for pricing through lowering the cost of packaging and advertising as well. The Cowgirl Chocolate has already created a website (http://www.cowgirlchocolates.com/) that could process the advertising target of the organization. All that the owners have to do is to increase the advertising influence of the website through linking their site to other search engines such as Yahoo! and Google. This process would be much cheaper than investing in a magazine based marketing that costs so much for one whole page of commercial. Unlike magazines, the customers reached by the internet are indeed unnumbered while magazines reachnly a few readers. In terms of packaging, the artistry and creativity of the packs need not be hurt, just the process of making them through looking for less-costing suppliers of materials could be taken into consideration by the entrepreneurs of the business.

DEMAND-BASED PRICING: Who eats the products? It should be accepted that not everyone wants a chocolate product that has a bit of a kick of spiciness. However, the business could well expand their market influence to creating a variety of products that are to suit everyone’s taste. Although their specialty is still on the top of the list, it is suggested that the new products such as sweet chocolates be used to allure customers to buy their chocolates and their specialty products as well. Through this, the prices could vary among the specialties and the new products. With the variety of product’s prices, the customers could have better choices and through this, the demand level as per received from customer.