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Easy Profitability

Paper Pricing Predicament

#Retail #Consumer Packaged Goods (CPG)
ProHub Comment

This case tests the candidate's ability to build a structured pricing framework using market positioning analysis combined with cost-plus markup calculations. The case progresses logically from market landscape assessment (Exhibit #1) to cost structure analysis (Exhibit #2), requiring candidates to identify the optimal market positioning and calculate pricing based on supplier costs and industry standards. The evaluation criteria emphasize industry-specific thinking and the ability to recognize missing analytical pieces.

Estimated Time 16 minutes
Difficulty Easy
Source Duke
10 / 100
Complete Foods, a leading supermarket prominent across the U.S., is planning to release a private label line of paper towels. They currently sell fresh and shelf-stable grocery products as well as some common household items such as hand soap and kitchen supplies. Some of these products are brand names and some are private label. The CMO has asked your team to think through the pricing strategy for the new line.

Clarifying Information

  1. Complete Foods has 50 stores across 10 metropolitan areas, scattered across the United States.
  2. Complete Foods only stocks products that are free from artificial colors, flavors, and preservatives.
  3. Last year, Complete Foods brought in revenue of $200M.
  4. Compare Foods already produces private label grocery products but no private label household goods.
  5. Private label means products that are produced by the same company that is selling the products. These paper towels will be produced by Complete Foods and only sold in Complete Foods stores.
Mock Interview
Interviewer

Complete Foods, a leading supermarket prominent across the U.S., is planning to release a private label line of paper towels. They currently sell fresh and shelf-stable grocery products as well as some common household items such as hand soap and kitchen supplies. Some of these products are brand names and some are private label. The CMO has asked your team to think through the pricing strategy for the new line.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
Score coming soon
Practice this case with AI Mock Interview

Complete Foods seeks to launch a private label paper towel line and needs a pricing strategy. Candidates must analyze the competitive landscape to position the product appropriately (identifying a mid-range opportunity between budget and premium brands), then calculate production costs across paper, packaging, and shipping components, and apply industry markup to arrive at a recommended retail price of $3.64 per 75-sheet roll.

Key Insights:

  1. Market positioning precedes pricing: Use brand perception vs. price scatterplot to identify gaps in the competitive landscape before calculating costs
  2. Cost-plus markup approach: Calculate per-sheet paper costs × 75 sheets, add packaging and shipping, then apply 30% industry markup
  3. Supplier quality criteria: Narrow analysis to medium or high-quality suppliers rather than evaluating all options, balancing cost with quality alignment
  4. Missing piece recognition: Candidates must identify that they need information about packaging, shipping costs, and industry markup to complete the analysis
  5. Strategic considerations extend beyond pricing: Post-launch factors include promotional strategy, shelf space management, supply chain optimization, and competitive reactions