3c. The advices about setting prices of the products in the light of the organization’s objectives and the market they are entering. 3c.1 Definition of price and the role of pricing
Price is the amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service (Principle of Marketing, 2008) Pricing products play a very important role in the company’s business operation. They can be listed as below: •
Price is a signal to the customers
Price is an instrument of Competition
Price improves financial performance
Price is one of marketing program considerations
3c.2 Considerations when setting price
There are some factors which are considered when a firm setting prices for its products
Customers’ perspective: How the customer perceives the value of the product determines the maximum price customers will pay.
Marketing objectives: marketing positioning, survival or current profit maximization influence pricing strategy •
Marketing mix strategy: pricing must be carefully coordinated with the other marketing mix elements. •
Organizational consideration: in small company, the CEO will set the price while in large company, divisional or product line manager determine it.
Nature of the market and demand
Competitors’ strategies and prices
Product cost: How costs vary at different product level will influence price setting. Applying to Vinamit, the company has to research the market very carefully to determine the prices for the two new products: Broccoli and Lettuce chips and Beef Jerky. Because of different attributes of products, the method for setting prices will be not the same. Specifically, with Broccoli and Lettuce Chips, this is a product which appears in Vietnam for the first time so its uniqueness is highly appreciated. Therefore, Vinamit can use...
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