Professional Documents
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• Using standard mark-up pricing, Fisher-Price Toys need to sell the ATV Explorer for $9.20 for trade,
which meant $18.50 retail price
• At $12 retail price an annual demand of 1 million was anticipated, but would the people see value in
the ATV Explorer worth spending $18.50 was doubtful
• A single mould was capable of producing 500,000 units, high demand or anywhere close to
expectations would result in ill will among the trade for lack of sufficient capacity and investing in
another mould would be risky due to high uncertainty
The CHOICES AVAILABLE
Option 1:
Reduce the cost of production by eliminating some features like the horn, dummy passenger or the secret
compartment
Adv: Will bring down the price of the ATV Explorer in line with competitor's riding toys
Cons: Will reduce the functionalities of the toy thus engagement or attention span of children could reduce for this
product and it is against the companies policies to compromise on quality
Option 2:
Depart from the corporate advertising policy of promoting the entire product line and promote the ATV Explorer
individually on television to communicate the value and generate demand at the $18.50 retail price
Adv: Can generate demand even at the estimated price
Cons: Not in line with company’s advertising policy
Would incur additional expenses leading to higher losses in case of failure to generate demand
THE CHOICES AVAILABLE
No of units 66395
RECOMMENDATION
• Break even figures are quite low therefore Fischer-Price could afford an increased advertisement & promotions
budget
• They should go by the second choice, depart from the corporate advertising policy of promoting the entire
product line and promote the ATV Explorer individually on television to communicate the value and generate
demand at the $18.50 retail price
• This would be in line with the other policies of the firm; not compromising on quality and price structure remains
the same therefore no impact on margins
THANK YOU