The article first focuses on the Steinberg grocery chain. In the late '80's Steinberg needed to increase their market share. It was expected that they would lower their prices and start a price war like they have in the past. IGA- Boni, one of the four major players in the Quebec grocery industry, was concerned over this possibility as they would need to react to any price changes to keep their market share, but doing so would cause large profit los

Dealing with utility variances may be a difficult idea for a

The hypothesis of the experiment was that the sales of stock up goods would react differently to price changes than non-stock up goods and that demand for both is more elastic for price decreases than for price increases. The Bayesian theory was used so that the most profitable price strategy could be discovered and used in case of a price war, and also to indicate when to stop the experiment. Being able to stop the experiment was a very important factor in this experiment, as the store could lose a lot of money in one or two weeks. The manager was able to evaluate the information and decide whether or not to continue the experiment. A manager had to decide whether or not losing x dollars in profit was worth the information that the experiment exposed.

Steinberg: It's new promotion was "5% off your bill"--- 5% back to the customer for every dollar spent. (.05 cents for every dollar). They printed out special rebate coupons. Also, they announced improved customer service and hired several hundred new employees to live up to the promise. Just to maintain the pre-promotion profits, their sales would have to increase 23%. The coupons might have been a bad idea in themselves. The customers would have to keep track of where they put them, and the cost to print them was probably substantial. Steinberg had a 5% margin decrease, and their market share decreased from 20% to 19%

The experiment was run over six weeks with 72 grocery products. These products were not advertised during the test period. Regular prices were given to the products for the first two weeks. On the third and fourth weeks, the products were put into three groups and dependent on the groups, given a specific price. The prices for the final two weeks were to go back to the regular price. The 72 products were fully stocked with back up inventory to prevent sold out items and also the employees were not aware of the experiment. There were three pricing strategies; raising prices, lowering prices and maintaining prices.

Previous to this experiment, it was generally thought that price inversely affects quantity sold. A very important proposal in this experiment suggests that there are different price strategies for different types of products. Specifically in this case, stock up a

Some common words found in the essay are:
Design Previous, Market Quebec, Steinberg It's, Price War, Possibly Running, Learned IGA, Experiment Results, Weaknesses Strengths, IGA- Boni, market share, price war, Canada United, quebec grocery, decrease market, margin decrease, decrease market share, margin decrease market, grocery industry, quebec grocery industry, pricing strategies, 5% margin, pricing experiment, 5% margin decrease, results experiment, 20% increase price,
Approximate Word count = 1581
Approximate Pages = 6 (250 words per page double spaced)