Question

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!”

1. What should the marketing director make of this response?
2. If you were the candidate, how would you have responded to this question? for the course of pricing strategy: marketing approach

Answer 1

What should the marketing director make of this response?

Ans The response candidate gave to the marketing director  is not a appropriate answer to this question. The marketing director should have told him/her that they can not neglect the customers like this. Customers play a are very important role in determining price for a particular product or service. They are one of the important factors which determine price.If the end user (customer) itself is not satisfy with the prices then how and why they will purchase the product and from where do you get the profit you are talking about.

If you were the candidate, how would you have responded to this question?

Ans. If a was the candidate i would reply that " It is very important for a business to design or make everything keeping their customers in mind but what we need to differentiate between  in determining a pricing policy is that what price price the customer is demanding and what price he/she can paid. For better understanding i will give you an example, every customer wants low prices but if we sell our product to their expectations we will not be able to earn good profit. So the answer of this situation is we all have a range suppose we are purchasing something in 10 dollars we want the prices to be lower down to 7 dollars but if the price will be 8 we still purchase it. This means that every customer has a limit he/she demands below this limit but if we put the prices in the limit they will purchase it and they also will be satisfied. Hence by doing this we can improve profitability without unsatisfying our customers."