Solution Manual for Pricing Strategies: A Marketing Approach, 1st Edition

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Schindler, Pricing Strategies–Instructor ResourcesChapter 1: Answers to End-of Chapter QuestionsExercises1.The CEO of a large company selling seeds and garden supplies to consumers and businessesthrough catalogs and the Internet is unhappy with its overall profitability. He feels that part ofthe solution is to be more professional in pricesetting, and he asks the director of marketingto hire an experienced person for a new position of pricing manager. While interviewing onecandidate, the marketing director explains that the company has been advised to listen moreto customers and respond to their needs and asks the candidate how he would implement thisadvice in the area of pricing. The candidate responds as follows:“It’s great to listen to the customer when you are designing your product, but it’sjust not practical in pricing. All the customers have to say is that they want lowerprices. If you want me to increase profits, I can’t very well listen to that!”a.What should the marketing director make of this response?Candidate does not seem able to thoroughly apply the marketing concept.Listening to customerispractical in pricing; customer response depends on taking intoaccount customer feelings such as:–Prices substantially higher than expectations (sticker shock)–Price considered unfair, higher than can be justified–Perceived discount, price lower than expectationsb.If you were the candidate, how would you have responded to this question?Listening is practical, … if you do it right.I would ask about product value–what are its benefits to the customers?Further,I would notonlylisten tothe customerabout thevalue that can be harvested, but alsoaboutthe customer’s feelings about the price such as the feeling ofitbeing substantiallyhigher than the customer’s expectations, the feeling that a price is unfair, or higher thancan be justified, or customers perceiving they are receiving a discount, or a price lowerthan their expectations.Both identifying the value that the product represents to the customer and consideringcustomers’ price expectations and feelings depend onlistening to andunderstandingcustomer needs.2.An entrepreneur is starting a business selling decorative items, such as vases, wall hangings,and prints (framed or unframed) over the Internet. She is aware that she needs to make anumber of pricing decisions.a.Describe a decision that the entrepreneur must make that would be an example of pricesetting. Describe a decision that she would have to make that would be an example ofpricing policy.Price setting:$7 for a vase

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Pricing Strategies: A Marketing App...

Solution Manual for Pricing Strategies: A Marketing Approach, 1st Edition

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