Discussing the Issues

Certain 'inexpensive' products that waste energy, provide lew savings per package or require frequent maintenance may cost much more to own and use than products selling for a higher price. How would marketers use this information on 'true cost' to gain a competitive edge in pricing and promoting their products?

Companies must consider both the internal company factors and external environmental influences that impact on their pricing decisions. Consider a relatively new entrant in the world car industry -Malaysia's Proton Saga - which has sought a low-cost, value-for-money positioning in the volume sector. Its low price supports this positioning. What type of pricing approach is the manufacturer pursuing? How appropriate is this pricing approach, taking into consideration the key factors that the company should evaluate when pricing its products? Kxplain your answer.

3. Sales of a brand of malt whisky increased when prices were raised by 20 per cent over a two-year period. What does this tell you about the demand curve and the elasticity of demand for this whisky? What docs this suggest about using perceived-value pricing in marketing alcoholic drinks?

4. Gcncntech, a high-technology pharmaceutical company, developed a clot-dissolving drug called TPA that would halt a heart attack in progress. TPA saves lives, minimizes hospital stays and reduces damage to the heart itself. It was initially priced at 32,200 per dose. What pricing approach does Genentcch appear to have been using? Is demand for this drug likely to he elastic with price? Why or why not?

5. In the early years of global market expansion, Japanese car and camera makers took advantage of the experience or learning curve when pricing their products to penetrate overseas markets. What does this suggest about their pricin.g approach? How successful do you think this approach has been for the Japanese companies that have taken advantage of the learning curve?

Select a personal care product or cosmetic item that you regularly use. Notice the price of the item. What are the main benefits you are looking for in using this product? Does the price communicate the total benefits sought? Does the product's price suggest good value? Do you think the manufacturer or retailer is overcharging or undercharging consumers for this product? Why or why not? What pricing approach do you think is most appropriate for setting the price fot this product?

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