MARKETING
7th Edition
ISBN: 9781260087710
Author: Grewal
Publisher: RENT MCG
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Chapter 14, Problem 2MA
Summary Introduction
To identify: The correct view and the reason for it.
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One roommate believes the most important objective in setting pricesfor your new pet grooming business is to generate a large profit whilekeeping an eye on your competitors’ prices; the other roommatebelieves it is important to maximize sales and set prices according towhat your customers expect to pay. Who is right and why?
Be prepared to discuss the following, supporting your arguments with biblical principles that apply:
How to set prices that are just and fair that allow firms to pay employees well, but still make a profit.
How to advertise and promote one’s product/service in a way that truly represents the value/performance of the product/service.
Suppose you have been asked by a food company to design an experiment that examines consumers’ purchase intentions toward their product (i.e., cereals), as a result of their recent pricing strategies (i.e., low price, high price) and product quality (i.e., organic offerings, nonorganic offerings) strategies. Basically, they would like to know the best combination of product quality offering and pricing strategy that yields the highest levels of consumers’ purchase intentions. How would this experiment look like?
When working on this assignment, you should consider the following:
Subjects: The experiment participants should be customers who consume significant breakfast cereals and are diverse in terms of income group, age group and work type.
Experimental conditions:
Independent variables – quality (categorical), price
Dependent variable – Propensity to pay
Effects: The main effect shall be impact of independent variables on propensity to pay such as how much affect does quality or…
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- One of the four Ps of marketing is price, explain in your own words, what elements are involved in price besides the amount of money a customer pays for a product. In your answer, be sure to consider the concept of customer value.arrow_forwardSome high-fashion retailers, notably H&M and Zara, sell what some call“disposable fashion”—apparel priced so reasonably low that it can bedisposed of after just a few wearings. Here is your dilemma: You havean important job interview and need a new suit. You can buy the suit atone of these stores for $129 or at Brooks Brothers for $500. Of course,the Brooks Brothers suit is of higher quality and will therefore lastlonger. How would you use the two value-based approaches describedin this chapter to determine which suit to buy?arrow_forwardIn food markets, mongers price items by their weight. Zucchini is 49č per kilo; fish is $1.99 per kilo, et cetera. What if prices are based on length instead? Let us say zucchini is 49¢ per cm; fish is $1.99 per cm. From a monger's and a consumer's point of view, which metric, weight or length, is preferable? Please explain.arrow_forward
- One of the four Ps of marketing is price. Explain what elements are involved in price besides the amount of money a customer pays for a product. In your answer, be sure to consider the concept of customer valuearrow_forwardAs a newly appointed CFO of a microfinance, you realize the products on offer are not viable and therefore you decide to overhaul the product development process and product pricing. Highlight the key aspects you will focus on to ensure products are viable.arrow_forwardDescribe information that consumers may perceive from price. For example, some consumers think that if an item has a high price, then it will probably be better than its competitors. That may or may not be true.arrow_forward
- Based on the scenario, how can you define the importance of the price of a product in attractingcustomers?arrow_forwardJune is looking into buying her first home. She is shown a number of houses on the market, but the market appears to be sluggish because there are so few buyers. Interest rates are steady and June has several good prospect homes to choose from at reasonable prices. June is in a... O Seller's market O Lender's market O Builder's market O Buyer's marketarrow_forwardPrices are often set to satisfy demand or to reflect the premium that consumers are willing to pay for a product or service. Some critics shudder, however, at the thought of $2 bottles of water, $150 running shoes, and $500 concert tickets. Take a position: Prices should reflect the value that consumers are willing to pay versus prices should primarily just reflect the cost involved in making a product or service.arrow_forward
- If your customers can see the value of buying your product or service, they'll happily pay the price. If they don't see that value, it makes little difference how low you set your price, the customer will look somewhere else for the perceived value, even if "somewhere else" costs more than your product or service. True or False?arrow_forwardYou are making a special hot chocolate that costs you $0.45 per serving. You sell each serving for $3.50. What is the beverage cost percent?arrow_forwardYou are an owner of a small independent chain of coffee houses competing head-to-head with Costa Coffee. The retail price your customers pay for coffee is exactly the same as at Costa Coffee. The wholesale price you pay for roasted coffee beans has increased by 25%. You understand that you cannot absorb this increase and that it must be passed on to your customers. However, you are concerned about the consequences of an open price increase. Discuss three alternative price increase strategies that address your concerns.arrow_forward
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