Question

1. What are the ways to improve a product mix? Describe two approaches to use existing products to strengthen a product mix.

2. What factors must be considered when pricing products?

3. Explain the various types of pricing objectives.

4. Why is it important to consider the buyer’s sensitivity to price when pricing products?

Answer 1

Answer 1: Product Mix

Product mix refers to all the products of the organizations which are meant for sale and they also control the profitability of the organization. In this the products that are to soled should be having a proper and appropriate pricing which initially increase the profitability of the organization.

The organization can strengthen the product mix with the below given approaches

•  The organization can simply improve the product quality or appearance. This will initially increase and strengthen the product mix.
•  The organization can make changes in their product line up and eliminate the product which are not performing well which will save the organizational resources and will help the organization focus on the market where their product can be sold at the highest.

Answer 2: Pricing

Pricing is the most important and tricky part for any organization which can increase the sale or eventually fail the product in the market.

Let’s discuss some factors that must be considered while pricing any product

•  The organization should mainly consider the cost incurred while manufacturing the product as this is base of the pricing we need to be controlling the cost of the product in order to create a good pricing.

•  The organization should understand the needs and requirement of the customer many times the cheapest product in the market has the most demand by the customer. So the organization should consider that while determining price.

•  The organization should always set a target of profit which they want to earn from the product according to the objective of the organization in order to achieve the organizational goal effectively.

Answer 3: Pricing Objective

The main pricing objectives are following:

•  The important objective of pricing the product is to make the product run for the longer period of time which will eventually increase the profitability of the organization.

•  The objective of pricing is to receive the cost and profit margin from the sale of the product.

•  Pricing of the product is the single keen points on which the growth of the organization depends so the pricing is to be done in such a manner that increase the sale of the product and growth of the organization rapidly.

•  The targets of attracting the maximum numbers of customer towards the product will the most important objective of the pricing process.

Answer 4: Customers are always in that state of comparing each and every product in the market in order to get the best product in the best price. So it becomes the great responsibility of the organization to consider the buyer`s sensitivity while pricing the product or service in order to attract maximum numbers of customers.

Let’s discuss some of the factors

•  The organizations should always consider the fact of pricing the product in such a manner that it provides a good quality product at the best price in the market to its customer.

•  The other factor that is important for the organization is the brand popularity of the product as plays the major role in the customers mind of attracting customers and on the basis of that pricing of the product is to be done to maximize the profit of the organization.

•  As buyer`s always intend to compare all the product while buying any product so it becomes the great responsibility to make sure to compare their product with other product in the market while considering buyer`s perspective and then set the price bracket.