Capsim Case Study Able And Abby

The company tried to maintain premium prices for most of the eight years. Customers expect prices to fall within a reasonable range. With that being said, the market price for Able and Abby for the first four years was $35.00 and $45.00. Before discontinuation, in year five, Ace was priced at $35.00 while the price for Able and Abby was lowered to $34.00 and $43.00 to create more sales (Capsim.com, n.d). However, at this point the company did not want to drop the prices lower because we were considering our profit margin. Moreover, in year six through eight, Abby priced remained at $43.00, but Able prices fluctuated from $34.50, $34.00 and $28.50 in year eight (Capsim.com, n.d). Additionally, promotion budget drives customer awareness. The more customers that are aware of your product, the more likely they will choose your product. With these intentions, Able’s promotional budget for the first six years was $1500 and for years seven and eight we …show more content…
The easier it is to interact with your company, the more likely is customers will choose our products. With this in mind, Able’s sales budget for years one and two was $1500 and $2500 in year three. However, in year four, Able’s sales budget was increased into $3000 to increase consumer’s access to the product aggressively (Capsim.com, n.d). In years, five through eight Able’s sales budget remained at $1500 never reaching 100% accessibility. On the other hand, Abby’s sales budget for years two through eight was $500 and $1500 never reaching 100% accessibility. Also, Ace promo and sales budget in year five was $1500 and $500 before its product line elimination (Capsim.com, n.d). The firm was expecting to captures sales from our competitor by substantially lowering the price in year eight, yet again we underestimated our demand and the company again stocked out and lost those potential