During class this week, we talked about the concept of pricing. More specifically, the importance of price to marketing managers. Managers usually strive to charge a price that will earn a fair profit. To earn a profit, managers must choose a price that is not too low or too high, or in other words, a price that equals the perceived value to targeted customers. Trying to set the right price is one of the most stressful and pressure-filled tasks of the marketing manager. Trends in the consumer market attest:
- Confronting a flood of new products, potential buyers carefully evaluate the price of each one against the value of existing products.
- The increased availability of bargain-priced private and generic brands has put a downward pressure on overall prices.
- Many firms are trying to maintain or regain their market shares by cutting prices.
- The internet has made a comparison shopping easier.
- The United States was in a recession from late 2007 until 2009 and was still recovering very slowly in 2011.
How do you think marketing managers choose the appropriate price for a product? What factors do they take into consideration when setting a price?