Question

The Stoli Group makes a very high-end bourbon named Kentucky Owl. The marginal cost of making a 750-milliliter bottle of Kentucky Owl is $60. Stoli is deciding what price it should set for Kentucky Owl. What factors should Stoli consider in pricing this product?'

Answer 1

In setting a price for the high-end bourbon Kentucky Owl, Stoli Group should consider market demand, the competitive landscape, brand positioning, additional costs, and desired profit margins, in addition to the marginal cost of $60 per bottle.

Step-by-step explanation:

The Stoli Group, which produces the high-end bourbon named Kentucky Owl, should consider several factors when deciding on the pricing of their 750-milliliter bottles, beyond the marginal cost of $60. These factors include:

• Market demand for the product, which influences what consumers are willing to pay.
• The competitive landscape, including the pricing of similar premium bourbons.
• Brand positioning and the perceived value of Kentucky Owl in the eyes of consumers.
• Costs associated with marketing, distribution, and any additional value-added services that are included in the final product.
• Desired profit margins which contribute to the overall financial health and goals of the Stoli Group.

Considering these factors alongside the marginal cost will help The Stoli Group set a price that not only covers their costs but also optimizes their profits while ensuring market competitiveness.