(6 pages of text)
The CEO of a newly formed corporation had just finalized several outsourcing agreements to manufacture MoxiMed’s flagship product, the MoxaLamp. The MoxaLamp was designed to replace the practitioner’s role in administering moxibustion, a popular form of traditional Chinese medicine therapy. Now that the MoxaLamp was ready for production, the CEO must select a target market and set the appropriate selling price.
The focal point of the case can vary as potential topics include cost behaviour, marketing strategy and business-to-business marketing tactics.
- To encourage students to consider various factors (cost, competition and willingness to pay) when deciding on product pricing.
- To give students practice at calculating a product’s direct, absorption and full cost.
- To illustrate absorption costing’s usefulness as a decision-making too.
- To demonstrate how full cost per unit changes with volume.
- To illustrate the necessity for full cost per unit data for long-term pricing decisions.
- To educate students on the differences between business-to-business marketing and business-to-end-consumer marketing.
Health Care Services
China, Small, 2014
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