Question

1. Why is pricing so important to the Marketing Manager?

2. Explain the role of supply and demand in determining price.

3, Explain the concept of elastic and inelastic demand. Why should managers understand these questions?

4. Why is it important for managers to understand the break-even point? Are there any drawbacks?

5. If a firm can increase its total revenue by raising its price, shouldn't it?

Answer 1

Explanation:

Ans: 1 - Pricing is the most important part of marketing and essential element to decide the valuation for customer in market so it could be decided that customer are willing to pay this much price for the product or service.

Ans: 2 – Pricing is based on demand and supply of the product or service, demand lets you know the how much quantity is required in market by buyer at a certain desirable price and supply explains how much quantity is available for offer in market by seller. Imbalance of supply and demand can lead to higher price when demand is higher and supply is short and lower price when supply is higher and demand is lower.

Ans: 3 – Inelastic demand means when people are willing to buy same quantity as past regardless of lower or higher price, the requirement of quantity remain same no matter what is price. While Elastic demand means quantity requirement is constantly changing more than price. Marketing managers need to understand this concepts well as this help them designing marketing strategies and pricing of the product so the demand of product does not change that much.

Ans: 4 – Break-even point is the success indicator of particular startup firm. It shows the point where the revenue reach a point where total cost of sold product equals. Breakeven point explains how much time has business taken to cover the cost they have invested and how good is firm doing in market. Manager needs to analyze how much successful firm is and how good is doing in market.