3c. The advices about setting prices of the products in the light of the organization’s objectives and the market they are entering.
3c. 1 Definition of price and the role of pricing Price is the amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service (Principle of Marketing, 2008) Pricing products play a very important role in the company’s business operation. They can be listed as below: •Price is a signal to the customers •Price is an instrument of Competition Price improves financial performance •Price is one of marketing program considerations (www. examiner.
com) 3c. 2 Considerations when setting price There are some factors which are considered when a firm setting prices for its products ? Customers’ perspective: How the customer perceives the value of the product determines the maximum price customers will pay. ?Internal consideration: •Marketing objectives: marketing positioning, survival or current profit maximization influence pricing strategy •Marketing mix strategy: pricing must be carefully coordinated with the other marketing mix elements. Organizational consideration: in small company, the CEO will set the price while in large company, divisional or product line manager determine it. ?External consideration: •Nature of the market and demand •Competitors’ strategies and prices •Environmental factors ?Product cost: How costs vary at different product level will influence price setting.
Applying to Vinamit, the company has to research the market very carefully to determine the prices for the two new products: Broccoli and Lettuce chips and Beef Jerky.Because of different attributes of products, the method for setting prices will be not the same. Specifically, with Broccoli and Lettuce Chips, this is a product which appears in Vietnam for the first time so its uniqueness is highly appreciated.
Therefore, Vinamit can use Market Skimming method in which the producer set a high price to investigate the maximum revenues layer by layer from the segments willing to pay. If the consumers satisfy with that price, the company can maintain it. Otherwise, they will have to adjust it for more suitable with the market.In contrast, Beef Jerky is penetrating a market where there are many similar products are existing so the company should use Market Penetration method to catch the attention of customers by an attractive price which must be equal or lower than the competitor’s. However, in both of method, Vinamit has to concern about the product costs which include raw material prices, labor price and over head expenses to determine reasonable prices for two product.
In conclusion, the advice for price of Broccoli & Lettuce Chips is 10,000 – 12,000 VND/100 gram and with Beef Jerky, the price is higher, 30,000 -35,000 VND/100 gram.