Case: Johnson Snacks Case Study Help
Cost of decreasing product price by 5%:
Lowering the price of the product would lower the profit margin that the company makes on each unit of productit sells. Small changes in the price of the product i.e. any increase or decrease would last an inevitable impact on the profit. As the current revenue generated from the “Discount 2 You” segment is 560000 dollars, the 5% discount in price would lead to 1.33 selling price. If the company acquiesces on this request; the profit would diminish by 28000 dollars due to a 5 percent increase in the price of the product. The calculations can be seen in the Appendix D.
Recommendation
After analyzing the benefits and drawbacks of acquiescing on “Discount 2 You”’s request; the company is recommended todrop Discount 2 You, due to the unfeasible demands, unbearable costs, and big profit loss. But, as the company has been receiving out of stocks complaints from the potential customers from the outlet stores,perhaps, the best solution is that the company should have a backup supply of the most demandable products in accordance with the diverse seasons. Additionally, the company is recommended to keep the track of the items or products that are mostly desired or purchased by the customers & reorder those products automatically when it they are less in quantity. The customers’ feedback is essentially important to align the product’s features with the demands of customers in order to increase their satisfaction level, customer service & brand equity..........................
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