For those 3 thingsshould be clear that you are faced with a pricing decision in this case. Check the formula under the case reading. Change the number( e.g: how many seminars, how many salesforce, the price basic on Markup, ROI…how long need for payback(1-4 years...))Use those formula and massage different numbers. Try to find the most logic decision! and shows the Exhibit (graph). Also all of them require explain for calculations.

Background: You are first on the market with what is literally a life saving medical breakthrough – although you do know that there are more breakthroughs to come (e.g., drug eluting stents) within a relatively short time frame. Your analysis mustconsider a variety of ways that you might arrive at a price for the cardiac stent and, then, choose the one price structure that makes the most sense to you.

While one can consider the above from a philosophical, strategic viewpoint, one must first understand the costs and the various pricing methods that will enable one to arrive at a diverse range of prices from which to choose. That is, which price has the best chance of maximizing profits while satisfying sales growth in the category?

Therefore, in order to proceed, consider the following when making your recommendations and explaining the rationale behind those recommendations.

1. Do you think a separate sales force should be established by Cook to sell its new stent?

If so, how will that effect cost – quantitatively.

For example: 35 people used by Cook on salesforce for diagnostic each of them cost $45000 per year. You can chose the number of salesforce you need to make bring into sales the new stents. Also in the reading we see 9000 cardiologists in the US, but required between one to three seminars per month needed for a year, each seminar cost $8000. However, after 1 year they can do in service training class. So think about how many salesperson you need basic on profit and cost. The sales team can be mix with old diagnostic sales and new training sells. Calculate the cost. See what is the best decision. How many use from each group?

2. How many seminars should Cook run to introduce doctors to the new stent?

Example: More seminars means more cost

Note: Questions 1 and 2 pertain to costs. The decisions you make here will derive some of the cost factors that you will use when doing your calculations.

3. What do the following pricing methods indicate the price for Cook’s stent to be?

NOTE: Show the relevant calculations in your analysis of each method.

a. Use a simple mark-up on costmethod to arrive at a number of prices. Be sure to test eachprice with a breakeven analysisto see if the number of units needed to breakeven at that price is logical based on the facts in the case. That is, how long will it take Cook to paybackits investment based on each price tested?

b. What price is suggested by using ROI pricing; that is, stating a ROI percentage to arrive at a price?

c. Does market skimming(AKA price skimming) make sense here, and, if so, what price do you arrive at?

d. What prices are suggested by demandand valuepricing methods? Does such an approach make sense for the situation in which Cook finds itself?