SlideShare a Scribd company logo
Mr Ahern ecodillian.blogspot.co.uk 
ASDA 
have been doing more than slapping their backsides and demonstrating their pronounced green lettering 
this year. Some of their Smart Price chocolate has made quite the stir into the confectionary market. 
Consumers have ranted and raved about the quality of their budget alternative to the big players. Asda has 
regarded this as a bit of a bottom shelf secret for most of its product life, but new media attention has 
resulted in a strategic rethink of the beloved cheap chocolate. 
Asda have been experimenting with price points with their Smart Price chocolate, and due to the recent 
media hype and success have tried a range of prices in order to get the balance right. 
Price Per 
100g Bar 
40p 30 
45p 28 
50p 25 
55p 23 
60p 20 
65p 15 
Your task 
Quantity 
Demanded per 
week (Million) 
Total 
Revenue 
per price 
point 
1. Plot out a demand curve on a graph. 
2. Calculate total revenue generated at each price point 
3. Demonstrate the optimum price point on the graph 
4. Calculate PeD 
Extension Task 
We have sold this chocolate as a base 
product from which a lot of ASDAโ€™s repeat 
customer loyalty has been built. As such it 
has been drawn to our attention that with 
the right pricing strategy this could become a 
cash cow. (Tim Ahern, ASDA Marketing director)_ 
What price point should ASDA choose, and why? Justify your answer

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Asda have been doing more than slapping their backsides and demonstrating their pronounced green lettering this year

  • 1. Mr Ahern ecodillian.blogspot.co.uk ASDA have been doing more than slapping their backsides and demonstrating their pronounced green lettering this year. Some of their Smart Price chocolate has made quite the stir into the confectionary market. Consumers have ranted and raved about the quality of their budget alternative to the big players. Asda has regarded this as a bit of a bottom shelf secret for most of its product life, but new media attention has resulted in a strategic rethink of the beloved cheap chocolate. Asda have been experimenting with price points with their Smart Price chocolate, and due to the recent media hype and success have tried a range of prices in order to get the balance right. Price Per 100g Bar 40p 30 45p 28 50p 25 55p 23 60p 20 65p 15 Your task Quantity Demanded per week (Million) Total Revenue per price point 1. Plot out a demand curve on a graph. 2. Calculate total revenue generated at each price point 3. Demonstrate the optimum price point on the graph 4. Calculate PeD Extension Task We have sold this chocolate as a base product from which a lot of ASDAโ€™s repeat customer loyalty has been built. As such it has been drawn to our attention that with the right pricing strategy this could become a cash cow. (Tim Ahern, ASDA Marketing director)_ What price point should ASDA choose, and why? Justify your answer