Case Number: 3-112-004, Year Published: 2012
HBS Number: KEL692
Financial Strategy, Pricing Strategy, Price Elasticity
This exercise is one in a series intended to help students learn how to perform financial calculations in marketing contexts. Carolina Araujo had recently taken control of her family’s business, Pepita Disco PPM, Uruguay’s second-largest producer of beef-based dog food, treats, and toys. While she respected the company’s nearly eighty-year history, Carolina felt that Pepita Disco had grown complacent with its market share and was basically preserving the status quo. Her plan was to re-energize the employee base and grow Pepita Disco’s business faster than the overall market. This exercise poses a fictional problem about a company's efforts to predict the impacts of price, product cost, and spending moves on profitability.
After completing the exercise, students should be able to: • Calculate and explain changes in net margin • Calculate price and volume changes for a given price elasticity
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