3. Give an example of a product that challenges the market leader by offering a slightly lower price. If you were to raise its price higher than the market leader's, what price would you recommend and what do you think would its implication be? Product: Market leader: Recommended price: Market leader's price: Implication:
Just Answer the Number 3!
Here is the Answer for the Number 1.
Markup price: - It is defined as the difference between cost price to make building and the price charged from customer. Markup price is simply a price that is added to actual price of construction.
- Any building or industrial contractors prefer markup pricing method because it sets prices for goods which will give profits to contractors. It is very useful for products whose price varies frequently.
- Markup pricing strategy is easy to calculate reason behind that is it consists simple equation which eliminates confusion in pricing the products. Also, it is very fast and error free with respect to other methods.
- With the help of markup pricing method contractors can recover labor or other price easily.
- Markup price is useful for bulk pricing. For example- One has to do pricing of hundreds products then just set a profit percentage on each products which will save the decision making cost.
Here is the answer for the number 2!
The products whose price cannot be deter mind or classified as being high or low are those products the demand for which will remain the same even if the price changes. The only products that come into this category the products called price insensitive.
Price insensitive or those products whose demand remain the same irrespective of the change in price. Such products are those products which are necessary for fulfilling the basic needs of humans.
Let's talk about it in brief:
Price sensitive products as earlier stated are those products whose demand remain the same no matter what changes occur in the price of these products. There are various examples of such products such as water, bread and housing et cetera.
If you take an example of water then it is difficult to say what should be the right price for a water. Because water is a necessary item for the survival of human and no matter what the prices the people will definitely purchase it. So, the products the price of which cannot be deter mind are the products which cannot be classified as being too high-priced or being too low priced.
Another example can be of housing. People need a shelter to live. And housing is also the basic need of human.
In case of housing also deciding the price of a house is also difficult as even if it is too high people will purchase the house as they need shelter and even if the price is low, they will still purchase the house provided that there will not be any change in the quantity demanded as there is certain specific quantity of the products which satisfy the basic needs.
From the above discussion it can be clearly stated that the products which satisfies the basic needs of human are the products whose prices cannot be classified as being high or low. In the main reason behind this phenomena and is these products satisfy the basic needs and there is certain quantity fixed for these products also because they satisfy the basic needs they will be purchased in any situation by any people at any price. Hence, categorizing them into the high or low price products is difficult.
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