ACTIVITY (09/19/2022)

BSBA_MM 2A

1. Explain the importance of pricing a product?

Pricing is important since it defines the value that your product is worth for you to
make and for your customers to use. It is the tangible price point to let customers
know whether it is worth their time and investment. The price you set sends a
message to some consumers about your business, product, or service, creating a
perceived value. This affects your brand, image, or position in the marketplace.

We live in a value-driven society, pricing is a reflection of everything you do as a

business, from product development down to a link to your website. Nothing more
accurately describes a company or a product. Discovering the theoretical
underpinnings of pricing and demonstrating the significant influence price
optimization can have on your earnings will help us examine why pricing is
genuinely the (unbiased) most important component of your organization.

Pricing is an important decision-making aspect after the product is manufactured.

Price determines the future of the product, the acceptability of the product to the
customers, and the return and profitability of the product. It is a tool of
competition.

2. What are the factors to consider when pricing a product?

Profitability can be increased by understanding the difference between cost and

value: the cost of your good or service is the amount you pay to manufacture it.
Your financial compensation for offering the good or service is reflected in the
price. The value is what you think your consumer will be willing to pay for your
good or service.

•Identify your Product Pricing Goals

•Know your Costs.
•Know your customers.
•Market Positioning.
•Product Value.
•Do your Market Research.

3. How sensitive are you to discounts? For instance, for clothes, shoes, or bags:
a. will a 25 percent discount attract your attention?
b. will a 20 percent discount attract your attention?
c. will a 15 percent discount attract your attention?
d. will a 10 percent discount attract your attention?
e. will a 5 percent discount attract your attention?
f. will a 2 percent discount attract your attention?
What is the minimum discount that is required to get you to go out
of your way and go to a sale?

When I see clothing, I want but the price is prohibitive, I make every effort to
negotiate a reduction. The key is to persuade the vendor that a discount is possible.
Naturally, since I enjoy it when they have discounts or if they are on sale in the
mall, I'll pick the letter A which is will a 25 percent discount attract your attention?
Of course, if a store offers a large discount percentage, you can receive a low price.
For instance, if a t-shirt costs 300 pesos and is on sale for 25% off, you can
purchase it for 225 pesos.

Almost every industry uses sales discounts, with retail and e-commerce possibly
being the most common venues. Some of the most common, well-publicized, and
readily apparent instances of sales discounts include flash, seasonal, and clearance
pricing campaigns.

However, the idea is widely applicable and goes far beyond those areas. It applies
to all industries and may be used by companies of practically any size or type,
from B2B SaaS behemoths to lone service providers.

4. What is the pricing procedure? What does it consist of?

The main concept of a pricing procedure is a combination of different types

of charges, like Gross price, freight, discount, surcharges, etc. We use the
pricing procedure to determine these all conditions into one procedure,
where we can find the sub-total for the net amount.

5. What is the purpose of “target rate of return pricing”?

 Target return pricing is a pricing strategy used by e-commerce experts that
helps them set the price of a product based on the expected rate of return of
their business. Target-return pricing Target-Return Pricing is a method
wherein the firm determines the price based on a target rate of return on the
investment i.e., what the firm expects from the investments made in the
venture. Here, the firm calculates the amount invested in the business
activities and then determines the return they expect from these assuming a
particular quantity of the product is sold.

6. What is “odd-numbered pricing”? What are the reasons behind this method?

Odd-Numbered Pricing

This refers to the practice of setting prices even below peso amounts. An example is
selling at ₱99.50 rather than at a flat ₱100. There are good reasons for this method:
1) At only a 50-centavo difference, ₱99.50 appears to be more attractive to the
prospective buyer than the 100 prices; and
2) The sales clerk will be forced to give a 50-centavo change prompting him to
enter the sales transactions in the cash register.

7. What are price adaptation strategies?

The price of a company may be adapted following several adaptation strategies.

Depending on the policies it chose to pursue, a firm may select one or more of
these tactics.

There are four distinct price-adaptation strategies.

a.) Geographical Pricing

-The practice of altering a product's sale price based on the buyer's location is
known as geographic pricing. Sometimes the cost of shipping the item to that place
determines the difference in the sale price. But the amount that people in that area
are willing to spend may also account for the discrepancy. It is a pricing technique
whereby a company alters the price at which it sells a specific product on a
geographic basis, charging various rates in different regions.
b.) Price discounts, allowances, and promotional pricing

-List price is the typical cost a marketer has determined for the goods. However, it
isn't always the price the buyer was charged. Basic pricing is modified in this case
and referred to as discounts and allowances to reward customers for actions like
early payments, bulk purchases, and off-season shopping. The majority of
businesses will modify their list prices, offer discounts, and make exceptions for
early payment, bulk orders, and off-season purchasing.

c.) Discriminatory pricing

-It is a sales technique where the seller sets several pricings for the same good or
service depending on what they believe they can persuade the client to accept. A
merchant that practices pure price discrimination will impose the highest price
possible on each customer. The more typical types of price discrimination involve
the vendor classifying clients into groups according to particular characteristics
and charging each group a different price.

d.) Product-mix pricing

- A producer sets the price of the good or service he provides by combining several
different "price-related variables." These aspects include the price of producing the
product, the variables that affect pricing choices, the numerous pricing strategies,
the pricing goals, etc. All of the goods a business has to offer clients are included
in the product mix. Therefore, a pricing plan that takes into account the product
mix might be referred to as a product mix pricing strategy.

8. What is the degree of control over price by the seller in a monopsony? Why
is this so?

In a monopsony, a large buyer controls the market. Because of their unique

position, monopsonies have a wealth of power. For example, being the primary or
only supplier of jobs in an area, the monopsony has the power to set wages. In
addition, they have bargaining power as they can negotiate prices and terms with
their suppliers.
9. List down examples of firms or institutions operating under conditions of
(Three examples each)
a. monopoly
• Fortune Tobacco Corporation
• Electric power companies such as CAGELCO
• National Waterworks and Sewerage System Authority
(NAWASA)
b. oligopoly
• Philippine Airlines
Philippine Long Distance Telephone Company (PLDT)
• Shell plc
c. oligopsony
• Sari-sari stores
• Cocoa Production that supplies a few chocolate factories.
• Tobacco production that supplies few cigarette manufacturers.

10. Prepare a list of products that are priced using: (Three products each)

a. perceived value – paintings, sculptures, and posters

b. price-quality relationship – iPhone, Washing machine, and Computers
c. loss-leader - Toilet paper, milk, and eggs are typical examples of loss
leaders in supermarkets. They are sold at discounted prices to draw
customers to the store, where they will also buy plenty of regular-
priced items.
d. odd-numbered - When the price of a product is an odd number, such a
pricing method is known as odd pricing. Examples: Vans, Nike, and
Converse.
e. price lining - This method refers to the practice of selling merchandise
at a limited number of predetermined price levels. The different price
levels are intended to represent various levels of quality. The various
models of handy phones offered for sale at varying prices by
manufacturers, like Nokia, Samsung, and Sony Ericsson are examples
of price-lining pricing
GROUP MEMBERS:
Cudal, Meliza
Datul, Jossa Camille
Lopez, Natasha Kaye
Orpilla, Jamaica
Salazar, Mark Xavier