Anewly developed company that is focusing on catering to the premium pet market. specifically, the company is creating gourmet/organic grain-free fresh dog treats. while these treats are similar to some treats offered on the market currently by such companies as freshpet, one of the biggest differences is the packaging approach. one of the limitations to freshpet products is the product must be refrigerated in the store, which limits the number and types of retailers that will adopt the product. most stores do not want to put a refrigeration unit in the middle of their pet food aisle. fresh dog uses aseptic packaging that only requires the product to be refrigerated after opening. this will allow the product to be displayed in the normal pet aisle without the requirement of the refrigeration unit. as the company progresses forward with this product, there are several marketing issues that have not been resolved.
assist them in this decision-making process.
> after calculating the cost of goods sold, the company has determined that the cost per 8 ounce bag of treats is approximately $2.97. the company desires a 40 percent contribution margin on each package sold. they also know that most wholesalers in this industry use a 32% mark-up and many retailers maintain a 25% mark-up as well. following this channel and based solely on the calculations, what will be the price that the normal retailer will charge for the product? reflecting on the psychological aspects of pricing and specific pricing tactics theories, what would your final price recommendation be? how would the price vary based on a price elasticity of 0.3?