(book page 275)
'Price is the only element in the marketing mix that produces revenue; all other elements represent costs. Price is also one of the most flexible marketing mix elements. Unlike product features and channel commitments, prices can be changed quickly. As a part of a company’s overall value proposition, price plays a key role in creating customer value and building customer relationships.'
(book page 275)
'The price the company charges will fall somewhere between one that is too high to produce any demand and one that is too low to produce a profit ... Customer perceptions of the product’s value set the ceiling for prices. Product costs set the floor for prices.'
(book page 276)
'Three major pricing strategies: customer value-based pricing, cost-based pricing, and competition-based pricing.
- Customer value-based pricing: Setting price based on buyers’ perceptions of value rather than on the seller’s cost.
- Cost-based pricing: Setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.
- Competition-based pricing: Setting prices based on competitors’ strategies, prices, costs, and market offerings.'
(book page 276-280)
The initial plan for Phileas Fogg's Seaweed Snacks is to price them at $2 per 2 ounce bag, that is a competition based price and is about what the competitors are charging. This assumes that price is lower than the cost. There are no plans to sell the product at a loss though some could be given away in bars possibly as a marketing strategy to get consumers to try the product.
Different size bags will be introduced as needed, like a larger bag, if the situation warrants it.
Being the low price leader would be hard in the beginning since the competition would have economies of scale therefore, the plan is to price the product in the middle of the competition, this will give customers good value and probably will produce reasonable profit, though this would be hard to calculate without knowing the full costs.
The initial plan for Phileas Fogg's Seaweed Snacks is to price them at $2 per 2 ounce bag, that is a competition based price and is about what the competitors are charging. This assumes that price is lower than the cost. There are no plans to sell the product at a loss though some could be given away in bars possibly as a marketing strategy to get consumers to try the product.
Different size bags will be introduced as needed, like a larger bag, if the situation warrants it.
Being the low price leader would be hard in the beginning since the competition would have economies of scale therefore, the plan is to price the product in the middle of the competition, this will give customers good value and probably will produce reasonable profit, though this would be hard to calculate without knowing the full costs.
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