Category: Business and Money > Advertising and Marketing
Asked by: secured-ga
List Price: $35.00
11 Nov 2005 19:10 PST
Expires: 12 Nov 2005 08:11 PST
Question ID: 592103
Prices 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. As an executive for a large multinational corporation I am meeting with other managers to discuss the following topic: Is the right price a fair price? Prices should reflect the value that consumers are willing to pay. vs. Prices should primarily just reflect the cost involved in making a product or service
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From: knickers-ga on 12 Nov 2005 06:12 PST
I'm not sure if you are asking a question here or making a statement. However, my 2 pence worth coming from a consumer and a previous manufacturer. Consumers are becoming far more wiley and are generally shopping around for "the deal" more. Maybe this is a reflection that brand value means less now and overall price is more important. The biggest question you pose is what is "value". In value do you include Quality and Brand recognition. Many consumers will be willing to pay a premium for just that whilst others just want low price. I was once given a very simple formula which seems to work well. Your products Perceived Value (V) is given by Quality(Q) multiplied by Convenience (C) and divided by price (P) i.e. V=Q.C/P What you need to do is use this formula to score yourself against your major competitors. Just use a scale of 1-10 for each item. You do it and your senior managers do. Then get some lower level staff do the same thing and maybe some consumers. You may be surprised by the result and how you view your value versus others. A good example of how this has worked recently is the CD industry. The supermarkets are doing a storm on music titles versus the traditional music shop. Why? Q is exactly the same. P is slightly lower but C is much higher because you do it as part of your weekly shop, so overall V is way up on the CD shop. Personally I still think that brand does carry a lot of weight even though consumers are becoming more wiley. However, it is what that brand stands for. If the brand carries good quality and superb after sales serive then the Q factor obviously takes a leap. Hope that helps.
From: secured-ga on 12 Nov 2005 08:06 PST
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