For more than 95 years, Blaine Candies has operated a candy shop in a convenient downtown location in a middle-sized Midwestern city, providing customers a well-regarded assortment of handcrafted chocolates. Blaine sells standard chocolates, such as buttercreams, caramels, peanut chews, and jellies as well as a variety of specialty pieces that are handcrafted, such as almond butter crunch, almond balls, marshmallows, and cashew patties. Chocolates are available in 1/2 lb., 1 lb., 2 lb., 3 lb., and 5 lb. boxes and are priced strictly by multiplying the amount of chocolates being purchased by the price offered for a 1 lb. box.
The company has relied mostly on cost-based pricing, using a 50 percent markup for chocolates produced at the store and selling purchased goods (e.g., gummy bears, Swedish fish, lemon drops) and tins at a 100 percent markup. Among national companies competing with Blaine Candies is Russell Stover (low-end) and Godiva (high-end). Blaine’s tends to set prices to be similar to those of local competitors.
(a) Describe the strategic prominence of price at Blaine Candies. What are the factors that appear to make this level of strategic prominence appropriate for this company?
(b) Use the material from this chapter to outline a plan that Blaine’s management can use to make routine, frequently occurring pricing decisions.
(c) Give an example of a change in the company, the market, or the marketing environment that might lead Blaine’s management to change the strategic prominence of price at the company.