Peer-reviewed assignment overview

Objective

Experience and react to competitor price moves in a fictional land where inhabitants love their
backpacks, a challenge faced in many industries when competitors change prices

1 2 3
Step Step Step

Review the case details provided in
these slides, including segments,
channels, competitors, current prices
and market shares.
Prepare a price move for your
company Pro-Packs in each of the
segments and for each of the
channels. Provide a rationale for your
decisions based on course content.
Review at least 3 of assignments,
providing thoughtful feedback to help
your peers improve their analysis.
Welcome to Backpack Land!

Market

People in BackPack Land love backpacks! Students use them to carry their books, professionals
use them to carry their laptops, and outdoor enthusiasts use them to traverse and explore.
Backpacks are a $300m industry.
Backpack Landians buy in three market segments

Laptop backpacks School backpacks Hiking backbacks

~400K sold annually ~300K sold annually ~200K sold annually

Laptop backpacks are a mainstream
product that all professionals and
college students own. They are the
preferred means for most people to
carry laptops, notepads, other
electronic devices, etc.
Backpacks for school-aged children
are used to carry school supplies to
and from school including books,
homework and bagged lunches
For the outdoor enthusiasts who
enjoy weekend hiking trips and
exploring rocky, hilly terrain. High
quality, lightweight, durable material
and the best craftsmanship is most
important in this segment
Four key competitors in BackPack Land
Tran-sport Backpacks
Tran-sport Backpacks caters to
the mainstream. With a focus on
the large laptop pack segment,
the company produces large
volumes in its expensive legacy
factories dating back to its
founding years.
It traditionally aims at a mid-
price range, obtaining market
shares of up to 50% in some
segments.
Youth Packs
Youth Packs dominates the kid's
pack segment. Children love
their flashy colors. While able to
carry some customers over to
other segments, the firm has
struggled to get traction outside
their core so far.
Youth Packs has been pricing in
the middle of the field, but rumor
has it they could move to
conquer new segments.
Community Backpack
A new company, Community
Backpack predominantly sells
through eCommerce. They
have successfully gained
marked share with a goal of
selling reasonably priced packs
to the masses.
With lean production facilities,
Community Packs has been
able to supply the market with a
lower priced pack option.
Pro-packs
This premium manufacturer is
the darling of hiking
connoisseurs. It recently
developed a line of laptop and
kids' packs to complement its
range of high-end outdoor
tailored packs which capture 40-
60% of that market segment.
The company prices in line with
the superior quality of its durable
and hand-made packs.
Scenario details

You are the CPO (Chief Pricing Officer) of Pro-Packs. It's the end of the current quarter.
You and your competitors are preparing to release your financial results to the market.
Prices and market share have been quite stable in the past several years, but there are
rumors circulating in the industry which lead you to believe that significant changes may be
coming.

1
Step

As the CPO, review the case details,

including segments, channels,
competitors, current prices and
market shares to be prepared for any
significant market moves that may be
coming
Current prices and volumes: Pro-Packs
Review
1 case
Step details
Laptop Packs School Packs Hiking Packs
$/pack volume $/pack volume $/pack volume

Dept. stores $82.50 2,836 $55.00 2,268 $162.50 5,672

Specialty $82.50 6,806 $55.00 5,445 $162.50 13,612

eCommerce $82.50 1,702 $55.00 1,361 $162.50 3,403

Total volume & 11,344 9,074 22,687

(est. market share) (11%) (12%) (48%)
Competitive pricing information
Review
1 case Approximate price/pack - exact actuals unknown
Step
details
Laptop Packs School Packs Hiking Packs

Trans-port
$70-$80 $47.50-$52.50 $145-$155
Backpacks

Youth Packs $70-$80 $47.50-$55.00 $145-$155

Community $70-$77.50 $47.50-$52.50 $145-$155

Backpack
Trans-port Backpacks’ major announcement

"We have identified the hiking pack segment as the primary focus for future growth. Trans-
port is the biggest player in the overall pack market and well established in the laptop packs
segment. We see an opportunity to improve our margins while still giving consumers a lower
price than is currently offered in the hiking pack market. Starting today we are lowering the
prices on our hiking packs by 10% in all channels."
– Jan S. Port, CEO of Trans-port

2
Step

Prepare a price move for your

company Pro-Packs for each channel
and segment. Provide rationale for
your decisions based on course
content
Assignment: Prepare price moves for your company Pro-Packs (I/III)
Prepare
2a price
Indicate your price moves for the Laptop segment in each channel. Provide a rationale /
Step supporting statements for your decisions based on concepts from the course, include ideas
move on other possible price moves you considered and why you did not choose them.

Sales by Channel Laptop Packs Rationale / decision logic

The Pro-packs is not strong in the Laptop segment (only 11%

77 market) and has the highest price among all. Given the quality of
Online
our products, it is important to bring it down to near the
competition

The specialty stores will help in explaining the features better,

Specialty
78 hence charge extra

Department store 77
It is good to lower down the price as we are not strong player

I analyzed the market share and price and it is important to lower down the price, other price
Other price moves
changes can be don’t go for any, but eventually it will hamper the brand as we are in
considered and logic
grassland and should be under the market leader
Assignment: Prepare price moves for your company Pro-Packs (II/III)
Prepare Indicate your price moves for the School Packs segment in each channel. Provide a
2b price rationale / supporting statements for your decisions based on concepts from the course,
Step include ideas on other possible price moves you considered and why you did not choose
move them.
Sales by Channel School Packs Rationale / decision logic

No price change as for us it is evolving category and the best

Online
55 player in market is selling similar to us, and given our great
quality it is important to promote it and not lowering the cost
No price change as for us it is evolving category and the best
Specialty player in market is selling similar to us, and given our great
55
quality it is important to promote it and not lowering the cost
No price change as for us it is evolving category and the best
Department store 55 player in market is selling similar to us, and given our great
quality it is important to promote it and not lowering the cost
We are relatively strong in this and should promote our distribution center and keep
Other price moves
innovating the products, or another case should be to get it below 52, and send strong
considered and logic
message to the comeptitors
Assignment: Prepare price moves for your company Pro-Packs (III/III)
Prepare Indicate your price moves for the Hiking Packs segment in each channel. Provide a
2c price rationale / supporting statements for your decisions based on concepts from the course,
Step include ideas on other possible price moves you considered and why you did not choose
move them.
Sales by Channel Hiking Packs Rationale / decision logic
We are the market leader in this and should behave like one.
162.5
Online We should wait for more price cuts by competitors in order to
reduce ours
We are the market leader in this and should behave like one.
162.5
Specialty We should wait for more price cuts by competitors in order to
reduce ours
We are the market leader in this and should behave like one.
Department store 162.5 We should wait for more price cuts by competitors in order to
reduce ours

Other price moves We should leverage the position in which we are and not retaliate to the price cuts by
considered and logic Transport backpacks
3
Step Rubric for grading assignments

Elements Criteria Score

Sets prices for each segment Defines prices for all nine possible channels & segments combinations. 5
by channel
Defines price for eight channel/segment combination. 4

Defines price for seven channel/segment combinations. 3

Defines price for six or fewer channel/segment combinations. 0

Considers other price moves Provides at least two other possible price moves and rationale for why these moves were not chosen 5
for each segment by channel

Provides one other possible price move and rationale for why this move was not chosen 4

Provides detail on other possible price moves but does not include a rationale for why these moves were not chosen 3

Does not consider other price moves 0

Provides a rationale/decision For three segments, provides a rationale for each recommended price move by channel 5
logic for recommended price
move by channel For two segments, provides a rationale for each recommended price move by channel 4

For one segment, provides a rationale for each recommended price move by channel 3

Does not provide a rationale for each recommended price move by channel 0

Feedback Other price moves to consider... NA