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Price Strategy/Breakeven Analysis Charts - Assignment Example

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The manufacturing company intends to give up the immediate profits to develop quality medical and recreational marijuana products to penetrate in the competitive domestic and global markets over…
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Price Strategy/Breakeven Analysis Charts
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Download file to see previous pages Due to legalization procedures, the market share of the existing firms is declining. In order to attract greater market shares, the company will charge a lower price of its medical and recreational marijuana products (Strauss, 2013). It projects to attain and maintain a 70 percent market share. The company shall deal and sell multiple differentiated products at different prices. It shall attain this objective by matching the consumers (retailers, health institutions and individuals) by the unit volume demanded (Khalsa, 2013).
The potential buyers for marijuana and multiple marijuana products are restricted by the constitution among other state laws of a particular country. The two factors affect the price the Medical Distribution Farm can charge (Khalsa, 2013). Legalization of marijuana in Colorado and Denver shall increase the demand of these products and therefore the company can charge a higher price. However, in most states, selling and consumption of marijuana products are against the social-culture of the nation state.
In the long run, the price the company charges must cover all the production and marketing costs of marijuana products. The expectation of the company is that continued consumption and marketing of marijuana shall create public awareness and therefore augment the demand for its products. It is not always true that the cost (production and marketing cost) will be covered by the price (Ogborne, Smart, & Adlaf, 2000).
According to 2013 geometrical analysis, the legal marketplace for legal marijuana products in the United States has been approximated at $1.7 billion. It includes both marijuana/cannabis and hemp markets. Medical Distribution Farm projects to obtain 70 percent of this market share. Its long-term total revenue, therefore, accounts to 1.19 billion, excluding the production cost and other operating and administration expenses. According to 2013 medical statistics, there are more than one million U.S. medical marijuana ...Download file to see next pagesRead More
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