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Unit 8 Project PRICING TOYS BASIC BACKGROUND Tri-Star Toys is introducing two new products influenced by Japanese pop culture. One is a trading card game called Laszot. The other is a line of 12-inch stuffed animals called Mie Dolls. Each doll is supposed to have a unique trait, such as being friendly or mischievous. Setting a Price Tri-Star wants your firm’s help deciding how to price these two new products. The biggest cost factor with the trading card games is creating the stories and characters. Assume a cost of $0.25 per card for the initial production. For the dolls, assume an initial cost of $4.50. Marketing expenses are $0.05 per trading card and $1.00 per doll. Demand for both items depends on conditions in the marketplace, which you will need to determine. YOUR OBJECTIVE Your objective is to prepare an effective pricing and retail strategy for Tri-Star’s two new products. The company wants to make a 15 percent profit off the products in the first year. You will need to identify a price for sale to wholesalers, retailers, and e-commerce sites as well as a suggested retail price (MSRP) for those businesses to charge their customers. Base your conclusions on research and analysis of current market conditions. ASSIGNMENT AND STRATEGY 1) Get the Background: To get started, you will need to conduct a situation analysis (SWOT) and competitive assessment for these two new products made by Tri-Star Toy Company. Learn all you can about the markets for trading cards and dolls, some of which may be collectibles. Don’t forget about the Consumer Product Safety Commission (CPSC) www.cpsc.gov 2) Write the Pricing Proposal: Begin your proposal by reviewing the reason Tri-Star Toy Company hired your firm. Then provide background information you learned from your situation analysis (SWOT) and competitive assessment. Use your research to justify your assumptions as you go through the six steps of pricing a product. 1. Establish pricing objectives 2. Determine costs 3. Estimate demand 4. Study Competition 5. Decide pricing strategy 6. Set Prices 3) What your project should include: Show the math you used to arrive at suggested prices for wholesalers, retailers and ecommerce sites, as well as the suggested prices for retail customers. Also create a table that depicts your competitive price analysis. Create other tables and figures as needed to show relationships among data. YOUR REPORT You will provide a paper and present your results in a powerpoint or prezi to the executives from Tri-Star Toys. Suggested Outline I. II. III. IV. V. Introduction A. Client's main problem B. Purpose of the proposal Background A. Situation analysis B. Competitive assessment C. Strategic Findings D. Government Regulations E. Suggested target markets 1. Laszot trading card game 2. Mie Dolls Deciding on the Price - Six Steps & Assumptions A. Pricing objectives B. Costs C. Demand estimate assumptions D. Competition assumptions E. Suggested base price and pricing strategies 1. Laszot Trading Card Game 2. Mie Dolls F. Recommendations for setting actual prices 1. For wholesalers 2. For retailers & e-commerce businesses 3. For resellers' customers (suggested retail price) Bibliography Appendix A. Mathematical calculations B. Competitive price analysis C. Other relevant tables and figures UNIT 8 PRICING TOYS RUBRIC NAMES OF TEAM MEMBERS: 1 Point 2-3 Points 4 points Addressed a few or none of the client’s objectives and cost factors in establishing prices. Addressed some of the client’s objectives and cost factors in establishing prices. Fully addressed client’s objectives and cost factors in establishing prices. Basic understanding of market for trading cards and dolls. Good understanding of market for trading cards and dolls and includes examples competing products Included a little information on competitors in the market. Gathered additional information on competitors in the market. Included a little information on government laws relating to children’s toys. Included some information on government laws relating to children’s toys. Ability to demonstrate the 6 steps in setting the price. Appropriateness of pricing recommendations and corresponding rationale. Gave a description of the firm’s process in setting prices. Somewhat addressed the steps in setting prices. Gave a description of the firm’s process. Pricing recommendations and corresponding rationale inappropriate and/or not addressed. Pricing recommendations and corresponding rationale somewhat appropriate and was addressed. Accurate mathematical calculations Not accurate. Some accuracy. Included mathematical calculations. Evidence that research was conducted to support decisions made Organization and continuity Little to no research was demonstrated. Some research was demonstrated. Not very organized and not very professional. Somewhat organized and professional. Use of client’s objectives and cost factors in establishing prices. Accurate situation analysis (SWOT) Knowledge of the trading card game and doll/toy markets Knowledge of governmental laws relating to children’s toys. Exemplary understanding of market for trading cards and dolls and includes examples of competing brands and products. Provided complete information on competitors and provided robust details comparing and contrasting. Showed evidence of research. Complete information on government laws related to children’s toys and provided example(s) included in project for products. Showed evidence of research. Fully addressed the 6 steps in setting prices. Explained how each step was accomplished. Pricing recommendations and corresponding rationale was appropriate to situation. Also, it was well addressed and supported. Demonstrated research and process. Completely accurate. Included mathematical calculations and competitive price analysis. Research was demonstrated thoroughly. Very organized and professional. TOTAL SCORE AVERAGE Total Score ÷9 Self Score Teacher Score