Niket Ghelani
MBA 642 - Marketing Management
Washburn Guitar Case Assignment
Ans. 1) Factors that affect the demand:
a) First time buyers: Budget or price point. Being a first time buyer, the person may not
want to spend a ridiculous amount in getting one-off customized guitar. A first time
buyer is always price conscious, unless the person is a collector. So this group of
buyers will have a higher demand for mass produced guitars.
b) Bought by a sophisticated musician who wants a signature model. A sophisticated
musician will want to go for a one-of-a-kind model. He/She will want to have a
unique model, which is designed to their specific taste. Something that they may
want to auction off or have it displayed.
Ans. 2) Examples of:
a) Shifting the demand curve to the right to get higher price for a guitar line. Celebrity
endorsement is a prime example for achieving this. Another example could be
experts, music teachers and magazines talking about the quality of the product.
Word of mouth is the biggest medium for marketing. In this day and age, it has
transformed to Social Media. So, people posting selfies with the product on social
media can be a good example of increasing the demand and thereby moving the
demand graph to the right.
b) Pricing decisions involving moving along the demand curve. This has to be evaluated
against which model is in higher demand and the price elasticity of that particular
model. If the model has elasticity, like the mass produced line, then the demand may
fall.
Ans. 3)
a)
b)
c)
d)
BE $349 = 187 units
BE $389 = 156 units
BE $309 = 232 units
Profit = $632,737
Ans. 4)
a) BE $349 = 146 units
b) Profit = $647,046
Ans. 5)
a) Specific Lowered Costs:
a. Fixed: Rent and Tax, Quality Control
b. Variable: Labor and Material
b) Potentially additional costs:
a. Fixed: Depreciation.
b. Variable: International shipping and insurance