Proposal to Address Declining Profitability Through Price Discrimination Techniques

Your boss has just given you an important, high priority assignment. The company’s core business
product has shown steadily shrinking profitability and you have been asked to address the problem by
coming up with at least two new pricing techniques. Your boss will meet with you at the end of the month
to hear your proposal. Prior to the meeting, your boss would like to see a brief Memo that outlines your
proposal and explains the impact it will have on units sold and profits.
Instructions
Develop a Memo of two to three pages for your boss. As a Memo is a succinct business communication,
it is helpful to work through your ideas before writing the document. To prepare in this way, make notes,
using the prompts in the Sample Outline provided at the end of these Instructions. When you are ready
to proceed with writing your Memo, use the same Sample Outline to structure the sections of your
Memo document.
Sample Outline
Use the following Outline of sections to organize the body of your Memo. Use the underlined headings as
section headings in your document. Use the prompts in each section to make sure you include the
required content.
No Cover page is needed. Instead, use the following heading at the top of your Memo:
TO: Your Instructor
FROM: Your Name
DATE: Submittal Date
RE: Managerial Economics 515 – Assignment 3 – Price Discrimination Memo
Introduction
Briefly introduce the overall purpose of the memo.
Product or Service
Briefly describe your product or service:
What utility or benefit does it provide to consumers?
Has your company offered this product or service in the past?
Which competitors offer the same or similar products or services in the market?
How has you company tried to stay competitive in the past?
Price Discrimination Proposals
Briefly describe the first price discrimination technique that you will use:
What is the current price?
What will the new price be?
How will this technique generate more profits?
Briefly describe a second price discrimination technique that you will use:
What is the current price?
What will the new price be?
How will this technique generate more profits?
Impacts on Market Demand
Explain and quantify how your proposal will impact sales within the first three months.
o Quantify using your assumed logic and consider displaying the impact in a data table. If actual
data is not available or not permitted by the company for use in this assignment, you may use
hypothetical trends or data, based on your understanding of similar companies in the industry.
Explain and quantify how your proposal will impact sales within eighteen months.
o Quantify using your assumed logic and consider displaying the impact in a data table. If actual
data is not available or not permitted by the company for use in this assignment, you may use
hypothetical trends or data, based on your understanding of similar companies in the industry.
What could the company do differently, as a result of the increased sales?
Conclusion
Write a brief conclusion, summarizing the key points of your memo.