Concept explainers
To discuss: Role of Person X if he hired as a pricing manager for a drug store chain which adds fixed percentage to its cost to arrive the retail price.
Explanation of Solution
Generally, the advantage of this type of cost-based pricing is that it’s comparatively easy to use and assumes that prices won’t vary much. It is called as markup pricing. Under this method retailer adds some markup to
But however, the cost-based pricing method does not taken into consideration of customers and the different roles of the competitors which influences the pricing decisions.
Person X views that, he can do differently by considering the actual demand for the product and he will try to consider the perceived value of customers and the degree of competition prevailed in the market.
Want to see more full solutions like this?
- Discuss the following the Ebay company, Select a single product for your firm and set a price according to multiple pricing approaches. Cost-based: Use best estimates for materials and labor costs. Use a reasonable percentage of price as an estimate for all overhead expenses – usually from 10% to 50%. Economic Value to Customer: Describe how you determine this price level; then do so.arrow_forwardPrice strategy is one of important component of service marketing. Why is the pricing of services more difficult than the pricing of goods? Provide an example to support your discussion.arrow_forwardPricing is important since it defines the value that makes it worth it for you to make and for your customers to use your product. It is the tangible price point that lets customers know whether it is worth their time and investment. As a sales manager. Discuss the skimming pricing strategyarrow_forward
- Which pricing strategy (or maybe a combination of strategies) is best for your product/service? Why? How did you come to this conclusion? What price will you offer your product(s) or service for exactly? Will you use any promotional strategies?arrow_forwardA study indicated that the optimal price for a consumer product is $32.45. Most products in the market sell for $29.99. What price would you suggest to retailers for selling the product and why? A haute cuisine restaurant is opening down the street, and its owner asks you for advise on pricing. Should you suggest that the restaurant price an appetizer at $6.99 or $7, and why?arrow_forward
- MarketingMarketingISBN:9780357033791Author:Pride, William MPublisher:South Western Educational PublishingPurchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning