You are on page 1of 9

SYMPHONY COOLERS

PREPARED BY

MARKET ENVIRONMENT
Demand for room coolers on the rise
Seasonal Sales, majorly accrued to the unorganized sector
Normal Room cooler costs between Rs. 1500-5000
SCSPL achieved product differentiation through innovation- Use of Fibre reinforced
plastics

SITUATION AT HAND FOR SCSPL
SCSPL achieved sales of 20000 units of
Symphony room coolers through retail and
10000 units through other brand holders in
1991
Profit margin of10% in previous year
Planning product line extension by
introducing two Variants
Koolers in lower price category
Harmonica in premium category
Pricing strategy for new variants
Constraints
Maximum capacity 40000 units
Minimum cannibalization of existing brand
Cheap lookalikes and competitors in lower price
category
EXISTING FINANCIAL ANALYSIS (1991)

When selling through dealers When selling to competitors
Retail Price 5000 VC 2100
Tax @10% 500 Markup 15%
SP for dealer 4500 SCSPL selling price 2415
Dealer Margin 1000 Number of Units 10000
SCSPL selling price 3500 Sales through competitors 24150000
Number of Units 20000 Contribution 3150000
Sales through dealers 70000000
Contribution 28000000

Total Fixed Cost 21735000
Total Profit 9415000
Profit Margin 10.00%

PRICING STRATEGY

Steps Kooler Harmonica
Pricing objective Market Penetration Product Quality Leadership
Estimate Demand On basis of past year sales
Estimating Costs Next Slide
Analyzing competitors prices Rs. 2000-3500 Rs. 5000-8000
Select a pricing method Going rate pricing Perceived value pricing
ASSUMPTIONS
Past year sale trend continues. Expected sales at least 30000 units overall
Half of the 60% consumers who found harmonica better than symphony might switch to
harmonica
PROFITABILITY ANALYSIS (1992-93)

HARMONICA KOOLERS SYMPHONY
VC per unit 2300 1800 Retail Price 5000
FC 550000 450000 Tax @10% 500
Selling Price 5999 2999 SP for dealer 4500
Tax @10% 599.9 299.9 Dealer Margin 1000
Sp for dealer 5399.1 2699.1 SCSPL selling price 3500
Dealer margin 1199.8 599.8 Number of Units 16000
SCSPL selling price 4199.3 2099.3 Sales through dealers 70000000
Contribution 22400000
BEP 289.5803717 1503.508 Profit 665000
No of units sold 6000 9000
Profit 10845800 2243700
Total Sales 128686500
Profit Margin 10.69%
% increase in sales 36.68%
FINAL DECISION
Retain price of symphony at Rs. 5000
Introduce Koolers at Rs. 2999 to compete at the lower price level
Introduce Harmonica at Rs. 5999 to encash on the premium quality
The difference between prices of three variants is kept large to
Minimize cannibalization
Cleary define categories
Discontinue supplies to other brand holder (A, B and C)



THANK YOU

You might also like