Case Study 17.2 Lipman Bottle Company

Lipman Bottle Company

Case Contents

Lipman Bottle Company started their business in 1909. In November of 1982 Robert Lipman who is the vice president of the company, was wandering what pricing strategy he should recommend to his father. (Anthony , Hawkins, & Merchant, 2011)The company main profits were coming from the printing of the labels on their bottles. They wanted to raise the profit area higher to make. A better profit. They wanted to make sure that they were gaining all the necessary profits available to benefit the company.

A carefully considered pricing strategy is vital to optimizing both sales volume and profit. ... Price is one of the most important ways in which customers choose between different products and services, and knowing the optimum price that you should charge to maximize sales and profits is key to beating the competition. The manipulation of prices, both upwards and downwards, offers enormous potential for increased profits. A famous study by McKinsey determined that for most companies, a 1% increase in price would generate an 8% increase in operating profit. The key thing to remember is that you have to make the right move at the right time. This requires an understanding of how price changes will impact on sales. For example, if a small decrease in price results in a disproportionately high increase in sales, decreasing the price may be a worthwhile move. (The Importance of a Pricing Strategy in Optimising Sales and Profit, 2019)

There are proper procedures and protocols to follow to make sure this is a smart strategy to utilize within the business. Robert wanted to make sure he had a flawless plan in action. Pricing is extremely important to a business because you don’t want to overprice for items. If you have a competitor in the same field you want to stay a little lower than them to have that competitive advantage. Overpricing can be