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Describe the important factors that a Marketing Manager would consider when deciding on the price of a new product or service. - Leaving Cert Business - Question A - 2005
Question A
Describe the important factors that a Marketing Manager would consider when deciding on the price of a new product or service.
Worked Solution & Example Answer:Describe the important factors that a Marketing Manager would consider when deciding on the price of a new product or service. - Leaving Cert Business - Question A - 2005
Step 1
Market Conditions and Competition
Answer
A Marketing Manager must evaluate the current market conditions and identify the level of competition. Understanding competitors’ pricing strategies can help in establishing a price that is competitive yet profitable. For instance, if competitors offer similar products at a lower price, the manager might consider adjusting the price to meet market expectations.
Step 2
Cost of Production
Answer
Determining the total cost involved in producing the product is crucial. This includes fixed costs (like rent) and variable costs (like materials). The Marketing Manager needs to ensure that the price covers these costs while also providing a desired profit margin.
Step 3
Step 4
Pricing Objectives
Answer
The Marketing Manager should establish clear pricing objectives. These could include maximizing profit, increasing market share, or ensuring long-term sustainability in a competitive market. Each objective may lead to different pricing strategies, such as penetration pricing or skimming.
Step 5
Economic Factors
Answer
Lastly, external economic factors like inflation rate, consumer income levels, and overall economic health can significantly influence pricing decisions. A Marketing Manager needs to consider these elements to ensure that the pricing strategy aligns with the current economic climate.