This case tests the candidate's ability to calculate customer willingness-to-pay through economic value analysis and apply segmentation strategy to maximize profit. The solution requires identifying that while large farms alone generate $7M profit, segmenting to include medium farms at a lower price point achieves higher total profit ($8.8M), demonstrating the power of pricing optimization beyond simple cost-plus approaches.
Your client is an agricultural products manufacturer. They invented a product called “Green Nutrient”. This product will help farmers by allowing a variable fertilizer rate which measures the specific amount of fertilizer required for a plot of land, reducing the chance of using too little or too much fertilizer.
The company is interested in a pricing strategy.