Companies try to make a profit by pricing their products and services at price consumers will...

Companies try to make a profit by pricing their products and services at price consumers will buy. For some companies, they offer lower prices to increase customer value. Rather than take the time to come up with a creative marketing mix that does a better job of meeting the needs of some target market, they just imitate competitors and make the head-to-head competition (and thus price pressure) in the market worse. These are the kind of people who then look at companies like Starbucks and say “How can they get $4.00 for a cup of coffee?” They don’t seem to realize that what Starbucks sells isn’t just the same as what others are selling. Not everyone will pay the higher price, but people who want something “special” will.

Question #1

Does a lower price for products create customer value and lead to success for a company?

Question #2

Why are some consumers willing to pay a premium for certain products?

Expert Solution

1.
Lower price does not necessarily create value for the customer as customer value is created when conformance to quality is delivered that meets the customer expectation. Further, it is the target audience and its purchasing power, method of pricing and the economy of scale in the operations among the other factors. Besides, the practices followed by the company and its value chain also decided the price. These practices should never be compromised for the sake of lowering the prices as it creates negative branding. As a result, the company can fail, rather achieving success.

2.
Some consumers want value that is created not only by the absolute quality of the product and services, but also the value driven process used by the company. For example, Starbucks charges higher price and people pay, because the company:
A.   Follows sustainability practices in the company itself as well as across the value chain
B.   Gives attention to the environment care
C.   Makes vendors and suppliers to produce coffee beans using only ethical and legitimate means ad resources.

Above initiatives towards the environment care and society is understood by the consumers and they are willing to pay more as they feel to make indirect contributions towards making this world a better place.

Rahul Sunny answered 2 years ago

Consumers / Customers shall be satisfied products/Services depending on many factor, So many organizations try to...

Consumers / Customers shall be satisfied products/Services depending on many factor, So many organizations try to find many ways to create value added to their customers. What are key functions of marketing channels to make them satisfaction, Please describe in details of each channel

1. Should it matter to consumers whether the companies flat make their products are based in...

1. Should it matter to consumers whether the companies flat make their products are based in the consumers’ home country or not? Explain your rationale. 2. Why has there been almost no negative backlash among Americans to the look of foreign investment into their country?

Companies try all sorts of sales promotions to encourage usage of their products/services. Coupons, one-day sales...

Companies try all sorts of sales promotions to encourage usage of their products/services. Coupons, one-day sales events, rebates, and free samples, are a few of the enticements that organizations have at their disposal. Which sales promotional technique are you most likely respond? Which one would you least likely respond to? ***Limit 120 - 150 words long (not exceed 150 words)

The marketing and pricing strategy of market segmentation and pricing products/services based on a strategy of...

The marketing and pricing strategy of market segmentation and pricing products/services based on a strategy of Good , Better and Best for delivering value to customers. In light of all your learning this week, step back and assess the implications of this strategy and whether the approach can assist in delivering enhanced "value Exchange", Smith, T. J. (2011). How does price discrimination (direct indirect) fit into the implementation of this strategy. Discuss the challenges and risks to implementing this strategy.

What considerations should a firm make when pricing their goods/services?

5. FuboTV and hulu are two streaming services companies that many consumers are using to eliminate...

5. FuboTV and hulu are two streaming services companies that many consumers are using to eliminate expensive cable-TV services. They offer similar benefits to customers. If the price of the FuboTV service decreases, this will cause a decrease in the _______ for the hulu brand streaming service which would be graphed as _______. Group of answer choices quantity demanded, movement up/left along its demand curve demand, leftward shift of its demand curve quantity demanded, leftward shift of its demand curve...

Price discrimination is a pricing strategy where different groups of consumers are charged different amounts for...

Price discrimination is a pricing strategy where different groups of consumers are charged different amounts for the same good. This is further divided into direct and indirect categories with direct price discrimination charging different prices to different groups of consumers such as adults vs children or students vs non students and indirect discrimination charging different prices based on features that consumers are willing to pay for such as a cruise ship ticket that offers interior, exterior or balcony cabins. Direct...

Terra Potteryworks is a price−setter that uses the cost−plus pricing approach for pricing its products. These...

Terra Potteryworks is a price−setter that uses the cost−plus pricing approach for pricing its products. These products are unique, artistically designed architectural decorations. Terra produces and sells 6,200 units per year, which represent maximum capacity. Variable costs are $320.00 per unit. Total fixed costs are $920,000 per year. The CEO has a target of $40,000 in operating income, which he wants to achieve by year−end. Using the cost−plus pricing method, what sales price per unit should Terra use? (Round your...

What is predatory pricing? What federal acts make it illegal? How are consumers hurt by predatory...

What is predatory pricing? What federal acts make it illegal? How are consumers hurt by predatory pricing you must go into great detail? Give two potential product examples of predatory pricing. Also describe a situation a marketer might face that might be legal but might not be ethical.

Cost and Pricing - Many businesses are offering their products and services over the Internet. Find...

Cost and Pricing - Many businesses are offering their products and services over the Internet. Find well known company and, determine the following: A product (or service) description A product price Based on your responses to parts (1) and (2), along with the description of the company's business, identify the potential costs that are required to provide the product selected in part (1) and categorize them as fixed or variable. Which product do you believe has the largest contribution margin...

Question