Reference no: EM132284420

As you know we have a line of workout DVDs that have not been producing good margins. The one that seems to be dragging the most is our Rowing Rapids tutorial set due to the entry of many alternatives such as Boating Bahamas and Outrageous Oaring that appeal to those unsavory college student instructors. Specifically, we are taking losses on our sales volume right now and I would like you to take a look at our current pricing scheme. Our sales department has estimated our monthly demand to be Q = 1,212 - 4P and our accounting department has informed me that our cost structure is effectively C(Q) = 91,000 + 3Q.

We are currently pricing our product at $175 and still losing money. Let me know if we should re-address our price point decision, or if we should consider withdrawing from the market. You never can tell with the shifting winds of the exercise market.

If we can improve the situation I might be inclined to roll out another advertising campaign to try and boost interest for the DVDs, so your review is of the utmost importance. On the plus side, our diving waterfall tutorials have been very popular with the 65 and older segment.