Source: People and Blogs (2011). Root Candles Sheds Light on Its Pricing Decisions. Retrieved from https://www.youtube.com/watch?v=cn82ij7evFg
This video explains the pricing method used by Root Candles to price the product it manufactures—candles sold under the family brand name of “Root Candles.” A number of pricing concepts are explained in the video: markup pricing, variable and fixed costs, price sensitivity, and price reductions. The influence of competition on pricing, in particular foreign competition, is addressed. The U.S. candle industry has been successful in getting antidumping duties assessed on petroleum wax candles from China, in 1985 and again in 2004. Bob Krulik, Vice President and General Manager, also talks about the impact of a material cost increase on profits when price cannot be increased.
After watching the video case, please answer the following questions:
1. Using the factors identified by marketing researchers that influence price sensitivity, explain why U.S. consumers are not overly price sensitive when it comes to buying candles.
2. What other pricing methods could Root Candles realistically use to price its candles?
3. How might Root escape the price-cost pressures it is experiencing with votives?
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