Case Study: Permaclean Products plc
The central issue in this case concerns product pricing. The analysis requires the estimation of appropriate costs and assessing price-demand information using past sales data. Permaclean Products is an old-established firm, located in Dunstable, manufacturing a comprehensive range of domestic cleaning materials. It has a sound reputation and a well-know brand name which has made it a market leader in a wide range of products designed for home use. Although Permaclean has several competitors, the total sales of each are small in comparison with those of Permaclean, mainly because none offers such a complete product range.
In 2009 the price of one of Permaclean’s major products, Permashine, was raised from 75p per bottle to 99p when the product was repackaged in a newly designed bottle; however, the contents were identical to the previous pack, both in formulation and quantity. During the following two years sales fell by 27%. At 75p per bottle Permashine had been competitively priced but when its price was increased manufacturers of similar products had not followed. In the period from 2007 to 2010 the price of competing products had been raised by only 5p. Prices were fixed once a year, to come into force on 1 February, before the annual peak demand which occurred in the spring. In January 2011, John Williams, the marketing manager, met with Andrew Dutton, the chief accountant, to review the company’s pricing policy for the coming year.
This is a case study that belongs to Strategic Management Accounting and it is about Permaclean which is a domestic cleaning materials manufacturer. Permaclean increased its price and its market share fell by 27%. The management of Permaclean is trying to implement Strategic Management Accounting at Permaclean
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