You have taken a new job as a Marketing Manager for a Soap Manufacturer. The pay is good; the company is cool, you get an office, company car and lots of young good-looking employees. Life is Good!

You have now worked there for 4 months. Over the weekend the CEO gets fired and then a new CEO comes thru the door Monday morning. She wants to understand the profitability and pricing structure of the Market. Wants to understand where the market pricing is (where do we stand relative to competitors). She is also interested in the impact of raising and lowering prices on the companys profitability

Your company is a manufacturer of Bar Soap and the main competitors average retail prices are listed below.

Dove = $6.88

Dial = $7.85

Irish Spring = $ 5.69

Caress = $6.99

Zest = $5.86

Ivory = $6.97

Aveeno = $9.67

Lever 2000 = $ 7.98

1. What is the average price for a Bar of Soap?

2. What is the price premium paid by customers when they purchase Irish Spring?

3. What is the price premium paid by customers when they purchase Lever 2000?

4. Your Boss hears that a Retailer is going to lower their price on Zest by $0.85. The Retailers Variable Cost of Zest is $3.12. How many more units will the Retailer have to sell to make the same amount of profit?

5. Your Boss hears that a Different Retailer is going to raise the price for all Soap Brands by 8%. What is the average price for a Bar of Soap after this retailer raises the price of all Soap Brands by 8%?

6. Your Boss hears that a Different Retailer is going to raise the price for all Soap by 8%. The Retailers Variable Cost of Dove is $3.62. How many more units will the Retailer have to sell to make the same amount of profit.

7. What is the price premium paid by customers when they purchase Ivory after the retailer has raised the price by 8%?