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Submitted By niks2689jain
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Submitted By:
Rishikesh Dubey
Mohammad Saqlain
Nikhil Jain
Adhish Mohanty
Siddhant Jain
Ankush Gupta Dated: 25/2/2013 * Case Brief:
Company Cost to mfg and Market New Bulldozer (a) =$30,000
Perceived worth of customers (5 years) =$100,000
Added value = b-a = $70,000. * Pricing options:
This Added Value of $70,000 can be shared by the customer and Manufacturing one of the Three ways: * They can share equally between the Caterpillar and the Buyers ($35,000 for both). Then Price = $30000 + $ 35000 = $65,000. * Manufacturer feels their hand in creating the value is more than Perceived Wealth. So they command a high share ($50,000 for Caterpillar & $20,000 for Buyers). Then Price = $30000 + $50000 = $80,000. * Caterpillar thinks Customers Contribution in perceived wealth creation is bigger. So pass the customers a major chunk and they take a smaller piece of the cake ($50,000 for Buyers & $20,000 for Caterpillar). Then Price= $50,000.

1) First Situation: When Technology is Low and Komatsu is expected to Copy the Product within 1 Week after launch. And, Komatsu’s Cost to Make & Market is $20,000. Minimum Selling Price that can be offered by Caterpillar = $30,000. But within 1 week Komatsu will launch the product at $20,000. So, Caterpillar will suffer losses if product is launched. Here, the Focus must be on following points: * Initially Concentrate on Market Penetration * CDV should be very High. In this case as soon as Komatsu launches the product the market will go towards it and CATERPILLAR will lose the market share.

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