After testing the market for environmentally friendly products in a couple of stores, Linda realized the need for a new pricing strategy. The current basic pricing strategy of Cost Plus is not a wise choice for this product choice. She believes THE TENDER TOUCH company should capture the first mover advantage and skim the crme. She is not sure whether it will be possible to implement this strategy, because she never done it. Linda decided to talk to the marketing manager, and ask whether this is a viable alternative, so she calls the marketing manager, and they go to the meeting room. Linda explains to the marketing manager, that skimming the crme, or Price Skimming is the most appropriate strategy for the company, because the company is a pioneer in these types of products in Ontario. Clients love the company, and the recent environmental awareness is changing the consumption patterns for the average Canadians. The marketing manager agreed with Linda but expressed the need for specific data which could support this important decision. So, Linda suggested compiling the data in an executive summary, and then discussing it together in the next meeting. Over the coming couple of days, Linda and the Marketing manager collected the data below. Current pricing strategy Cost plus Current average product price when compared to competitors prices THE TENDER TOUCH stores prices are slightly lower than competitors, around 2% lower. Average product price at companies stores $100 Average direct costs per product $23 Total overhead and indirect expenses $2 Million Demand Elasticity For a 10% decrease in price the demand goes up by 7%, i.e.sales increase by 7% and vice versa. Current sales level $ 7.7 million Note: THE TENDER TOUCH company is not using any credit facilities at any bank or financial institution. After examining this information Linda decided to calculate a couple of metrics before adjusting the pricing strategy. She is willing to know the current break-even point. She is also interested to know the change in sales if she adopts a Price Skimming Strategy. Deliverables, Format and Marking Scheme for This Weeks Case Study Your task is: 1% calculate the companys current sales and profits.