Question

marketers often use promotions and discounts to sell products. this means that customers often do not pay the list price for a product.

Mini Case: Price Waterfall Analysis Marketers often use promotions and discounts to sell products. This means that customers often do not pay the price for a product Marketers use the Price Waterfall approach to assess the causes of the gap between a product's list price and the actual net price paid by consumers. In this exercise, you are a manager who would like to construct a Price Waterfall for four different products. It is important to understand that there a many different ways to calculate a Price Waterfall, the correct way is based on the particular discounts for a product as well as how the data about the discounts is collected Click the icon to view the relevant promotional terms to calculate the Price Waterfall in this particular scenario. Click the icon to view the data for each product Which product has the greatest % of total price reductions? with the Price Waterfall of More Info %. (Round to two decimal places.) More Info Product D Product Product A Product B Product B $1.400 Product $1.300 Product A $1,500 10% $35 Product D $1.100 209 10% 1095 Dealer Discount Cash Discount Mailin Rebate % Customers who Redeem Milin Rebate $25 List price - The price of a product before all discounts or allowances Dealer discount - The % discount a dealer offers off of the list price for a product Cash discount An additional amount taken off the list price in this scenario, it is apg discount is applied Mail-in Rebate - A cash reimbursement given to purchasers who successfully mail in th all purchasers actually engage in the mail-in rebate) Net Price Actual price paid for the product by consumers. Price Waterfall (Net Price)/(List Price). Price Waterfall The reduction of the of the price actually paid by consumers, on avera $50 $30 90% $50 70% 70% Enter your ans 1 remaining Print Done

Answer 1

Product D with the Price Waterfall % of 75.36%

Net price = List price - List price*Dealer discount% - Cast discount - Mall in rebate*% customer taking mall in-rebate

Price Waterfall% = Net price/List price*100%

	Product A	Product B	Product C	Product D
List Price	$             1,500.00	$              1,400.00	$   1,300.00	$              1,100.00
Less: Dealer Discount	$                150.00	$                 140.00	$      130.00	$                  220.00
Less: Cash Discount	$                  35.00	$                   50.00	$         30.00	$                    30.00
Less: Mall in rebate (Mall in rebate x % customer who redeem )	$                  17.50	$                   27.00	$         30.00	$                    21.00
Net Price	$             1,297.50	$              1,183.00	$   1,110.00	$                  829.00
Price Waterfall %	86.50%	84.50%	85.38%	75.36%

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