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Controlling Demand Through Pricing

In: Business and Management

Submitted By Candice5200
Words 1407
Pages 6
Controlling Demand through Pricing: A report on the quantitative analysis of the ChocoMint bar

ChocoMint is a bar of chocolate under ChocoHeaven, which is a distributor of organic chocolate. In recent years, the business of ChocoMint bar encountered some problems. Since the ChocoMint bar is manufactured overseas, the supply chain could be unreliable. Besides, as ChocoMint is stored at special storage locations in the UK, the storage capacity for this kind of product in the UK is limited. Therefore, in order to prevent the storage from exceeding the company’s storage capacity limits, as well as reduce the risk from supply chain (relying less on the overseas supply chain), sales department of ChocoHeaven has been trying to keep the demand into control by pricing the product differently according to different market tendency. To implement the corresponding price strategy and make it more effective, ChocoHeaven have closely monitored the monthly price and the corresponding sales of the ChocoMint bar over the past two years, which helps to discover the most suitable relationship between changes in volume of demand corresponding to changes in prices. Based on data provided, this report analyses relative changes in demand as price changes by using both statistics and graphs, trying to identify the most suitable model for the relationship between the price and demand. Subsequently, the model will be used to predict changes in demand corresponding to different prices, which contributes to achieve the goal of keeping demand for ChocoMint bar into control through special price strategy.

Part1. Investigation of the relationship between the price and monthly demand

Figure1.1 Monthly demand for ChocoMint and relative prices

As can be seen from figure 1.1, generally monthly demand for the ChocoMint bar decreases as prices rise (although there is some...

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