A couple of thoughts:
1. Talk up the fact that these are machine washable! My own heirloom-quality baby blanket was destroyed when my mom stuck it in the washing machine without realizing that it was 100% wool.
2. Once you find the right price for Simply Soft, I would recommend taking orders which allow the blankets to be personalized a bit, but also offer a couple of different yarns at different prices. That way, she doesn't have to pay for more expensive yarn until she knows someone will buy the product.
3. Perhaps see if she could put some advertising at the LYS. For one thing, some people who knit or crochet don't have the patience to create blankets, and if they want a baby blanket they might be happy to buy a handmade one from someone else. Secondly, I think that if I was looking for a handknit or handcrocheted item, I would head to the LYS to see if the shop owner knew of anyone who could create that item for me (if I didn't know how to do it myself).
recent FOs: Shedir cap, Bricks of Atlantis, Pirates Hat, Citrine Socklets, Teddy bears, 1 entrelac sock
OTN: scraps blanket, Shedir for Teenie, Ice Serpent Hat
NIL: Qiviuk tam re-visited; weatherproof gloves; sweaters
My knitting blog: http://emilai333.wordpress.com/