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R.S. Hughes, Inc. makes a new type of rubber gloves for assembly-line workers and will sell them to companies that manufacture electronics products. Hughes' costs for producing these new rubber gloves is $3.85 per pair. Electronics manufacturers pay $6.20 per pair for the currently available rubber gloves for their assembly-line workers. Because Hughes' new rubber gloves allow a better grip, they will enable the workers at the electronics manufacturing companies to assemble 10 percent more products per hour than if they wear the currently available gloves. The average pay rate for these workers is $16 per hour. The Hughes company would like to estimate the value of this new rubber glove to the electronics-manufacturer customer. For all of the question parts below, when calculations are necessary, please show your work.
(a) What is the reference value of Hughes' new rubber gloves?
(b) What is(are) the differentiation value(s) of Hughes' new rubber gloves?
(c) What is an electronics manufacturer's VTC for a pair of Hughes' new rubber gloves?
(d) Assume the VTC you provide in Part (c). If Hughes uses a penetration strategy to price these new rubber gloves, give an example of a price that would fit that strategy. Explain your answer.
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