Mareting Essay Example | Topics and Well Written Essays - 2250 words

Mareting - stress ExampleIn todays business world it has become crucial for the management to be very crafty when pricing of products and services. In pricing a firm should consider the determine percept of the customers that is when attaching a legal injury to a product then that price should reflect the value perception of that product. If a firm see a price that is high than the value of a product then that means, the demand for that product go out go down which consequently will lead to decline in the volume of sales. If this happens then the character (sales less variable costs) and the gross margin of that product will decline leaving that firm lesser gross and net profits (Drew 1).Alternatively, if a firm set a price that is less that its value this will lead to high demand since the customers can derive more satisfaction from the product at a lesser cost. When a customer feels satisfied with a given product this will operate to increase his/her expenditure and volum es in that product. The increase in sales of that product may not inescapably lead to increase in the products contribution or the firms overall profit since the value of that product is higher than its price (Drew 1). This may lead to a loss in that product and also contribute a loss to a firms overall profits. ... The price of any product should show a reflection of its value. all(prenominal) time when a firm is setting a price it should ensure that neither it nor its customers loose from the closing made (Dodd 10).It is of utmost importance for the management or the pricing team to consider both the customer-value perception and therefore, they are responsible for regular and timely review of a firms products prices and their quality. Comparing a firms products to other firms commerce in similar products in the foodstuff which they operate in terms of quality and price is main(prenominal) for that firm if it will remain relevant in the market. The firm should be in a milit ary capability to differentiate their products from others so that their customers can be in a position to totally distinguish them. This translates to customer loyalty since they will not be faced with confusion due to the products available thereby increase sales volume and margins of that product. A firms product that has many substitutes available is at high risk of loosing its market share that is if the firm product doesnt give the much needed satisfaction by the customer in both aspects of quality and price. Therefore, it is imperative for a firm to regularly review its products quality by redesigning to negate being faced out of the market. Further, a firm should always offer competitive prices to its customer in order to compete favorably with other firms products. But in so doing they should not do it bit disregarding the costs involved since after all it will determine their profitability (Dodd 14). Other measurable internal and external factors affecting a firms prici ng decisionsInternal factors(a) Experience curveThis is a item in which the average cost (AC) declines as production of a product