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Cher owns a beauty shop and now wants to add a new line of hair care products. The product called “pretty hair” will cost her about $1.00 a bottle. One of the reasons she is paying only $1.00 a bottle is that although the bottle is over five inches high, the quantity of the shampoo is much less than the other products of similar size. The way she achieves this perceived value is a clever use of a false bottom in the container. She does not want to deceive anybody so she clearly states the fluid ounces on the side of the bottle….and rely on people’ perception of value.
The minimum order for this product is 1000 bottles. The suggested retail for this product is $3.00 a bottle. She has been informed by the “sales representative” that the best way to market this product is with an initial “sale price” of 50% off and should be used in connection with radio advertising. Being somewhat of a radio enthusiast herself, Cher decides that the best way to create a great radio spot is to use songs from long ago when she use to be with that other guy.
The radio advertising is costing $500.00 a month for a minimum of three months. Cher is “very sharp” and knows that one of her employees ($15/hour) will need to devote about two hours a days speaking with customers about this product. You have been hired by Cher to provide advice on this project.
