ASYNCHRONOUS ACTIVITY 1

Name: Macias, Charmae Ela

Class Group:BEN 2209 Grp 1

DIRECTION: Explain your answers in 200 words.

1. The CEO of a large company selling seeds and garden supplies to consumers and
businesses through catalogs and the Internet is unhappy with its overall profitability. He
feels that part of the solution is to be more professional in price setting, and he asks the
director of marketing to hire an experienced person for a new position of pricing
manager. While interviewing one candidate, the marketing director explains that the
company has been advised to listen more to customers and respond to their needs and
asks the candidate how he would implement this advice in the area of pricing. The
candidate responds as follows: “It’s great to listen to the customer when you are
designing your product, but it’s just not practical in pricing. All the customers have to say
is that they want lower prices. If you want me to increase profits, I can’t very well listen
to that!”
a. What should the marketing director make of this response?
The marketing director should comment on the response of the candidate. The
candidate was right in saying that it is important to listen to the customers in designing
product and in pricing. But in making a price of a product, the profit should also be
thought of. That is one of the main reasons why businesses are created, to make profit.
And if the profit is not enough, then the business would decline.
b. If you were the candidate, how would you have responded to this question?
If I were the candidate, I would implement this advice in the area of pricing by focusing
on both comments of the customers and the profit of the business. Listening to the
customers when pricing is very important. They give very valuable feedback. Listening
to customers will help you gather more information in order for your business to have
good customer experience, satisfaction, and more customers. The most vital
component in making money in a business is the profit it makes. Pricing the products
and services of a business is a strategy to increase a company’s own profitability.
2. An entrepreneur is starting a business selling decorative items, such as vases, wall
hangings, and prints (framed or unframed) over the Internet. She is aware that she
needs to make a number of pricing decisions.
a. Describe a decision that the entrepreneur must make that would be an example of
price setting. Describe a decision that she would have to make that would be an
example of pricing policy.
A decision that the entrepreneur must make that would be an example of price setting is
pricing each items with its individual prices to her specific target market/customers. For
example she decides to price the vases for $50.00 each because her target market is
just for the middle class. She could price her decorative items around$5 - $60.00
depending on the item. She could price her wall hangings and prints for around $100 -
$500 depending on the art style, artist, framed, or unframed. Another decision she
would have to make to be an example of pricing policy is she could only offer discounts
to senior citizens. She could also decide to allow discounts on specific holidays such as
black Fridays or Christmas holidays.
b. Describe a decision that she would need to make regarding price format, and
describe one regarding price structure.
A decision she could make regarding price format is to price her items below its round
number such as $9.99. This makes the price appear lower that it actually is. With this
effect, it can give a positive feedback to the sales. A price structure is a pattern of a
company’s prices. Since the entrepreneur sells a variety of products, she could decide
to make her own price structure. An example could be, having different prices for a
single product with different customers and when bought it bulk or individually.
3. As the marketer of your own professional services, you are responsible for price
setting. Thus, it is necessary that you think about your pricing policy.
a. Describe how a business professional might implement the following pricing policies
in the pricing of his or her services: negotiated price policy and fixed price policy.
A negotiated price policy could be implemented by a business professional only if the
customer and the seller both agree to the negotiated price. Both parties must be in the
same boat and agree to one price. A fixed price policy could be implemented by a
business professional if they are not comfortable with the price negotiation and having
different prices. Sticking to a certain amount could be best for some sellers.
b. Give and justify your views as to which of these pricing policies would be more
appropriate in an individual’s professional services pricing.
It is difficult to price professional services since service-oriented businesses are more
abstract than those of products. In my opinion, it depends on the service the business is
giving. For example if the service is spa or massage, a fixed price would be good
depending on the type of spa or massage. When it comes to fixing or repairing
materials, having a negotiated price would be better due to the amount of work that has
be done by the repairer.
4. Identify someone you know who works in a business organization. Talk with that
person to learn about the individuals in the organization who are involved in the setting
of prices.
a. Describe the job of a person within the organization who plays a direct role in price
setting.
Someone I know who works in a business organization is my dad. He owns a LED lights
business. He is the business owner and he makes the prices according to customer
feedback and his profit. My dad orders LED lights and screens from japan/china. When
he decides his prices he always makes sure that he gains profit from it and that it is a
good price for his target market or customers.
b. Describe the job of a person within the organization who plays an indirect role in
price setting. What is the information or expertise provided by that person? When during
the price-setting process does that person interact with an individual who has a more
direct role in price setting?
My fathers secretary plays an indirect role in price setting. She is the one who mostly
communicates with the customers and ask for their feedback regarding their products
and services. During the price-setting process my father and his secretaries talk about
the customer feedback and the prices from their main source abroad.
5. The marketing manager of a large truck manufacturer was surprised to learn that the
price lists generated by his department had little relation to the prices that were actually
charged to customers. The company’s finance department often changed the prices to
confirm to profit goals before the prices reached the company’s sales force. The
salespeople often gave customers discounts to increase their sales volume. The
operations manager made price adjustments to accommodate delays in promised
shipping times.
a. Why is this situation undesirable for the company?
This kind of situation is undesirable for the company because it could affect their
company’s profit. The moment they start to change the company’s price setting, it could
affect their projected profit.
b. What can be done about this situation?
In this situation, The company should make sure that they can still reach their aimed
profit. The company should always have a plan when such things happen. They could
opt to have a company sale to gain more customers and more sales.