Case Synopsis, Uses, Discussion Questions, and Answers
CASE 27 How Much for a Good Smell?
Synopsis: Upscale gift store needs to set a price for potpourri. The case takes students through
Use:
Chapter 13 Generate discussion of the issues that need to be considered in pricing an item
including what demand will be at various price levels.
Discussion Questions
1. What prices caused Courtney’s new charges?
$9.95 the same price as last year even though the cost has gone up.
2. Which price would result in the highest profit?
Price/unit Cost/unit GM/unit Unit sales Profit
$9.95 $5.50 $4.45 750 $3337.50
3. What other factors should Courtney’s consider?
Some other factors Courtney needs to consider in estimating demand are:
a. Changes that might be occurring in customer tastes and styles. Will the demand continue to
rise or are fewer customers going to be interested in potpourri this year compared to last?
b. If Courtney
Case Synopsis, Uses, Discussion Questions, and Answers
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4. What price would you charge, and how many units would you order?
This question makes students recognize the interrelationship between pricing and demand. It
also illustrates why stores tend to buy more merchandise than they think will be sold and then