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Should cost be a factor in carmex prices

02/12/2021 Client: muhammad11 Deadline: 2 Day

Chapter 14: Video Case: Carmex: Setting the Price of the Number One Lip Balm

1. Carmex utilizes the four approaches when setting a price for its products. First, it is with the aid of taste and preferences why Carmex use the demand-oriented approach in terms of pricing. Second, what leads Carmex to use cost-oriented method is the cost of ingredients, packaging, manufacturing, and staffing. Third, Carmex uses profit-oriented approach because of its premium products. And fourth, competition-oriented method is used by Carmex to consider the prices of the competitors. In this case, I don’t believe that Carmex should exclusively use one approach as the approaches have specific targets that should be in Carmex’s consideration list. The business can try all approaches as long as it can meet the pricing goals of the company.

2. Carmex’s pricing method that ends in 9 is called the “odd-even pricing.” This method allows consumers to respond differently to a product. For example, if there are two products of the same kind with prices of $4.99 and $5.00 respectively, consumers are likely to focus on the product costing $4.99 as they think this is cheaper than the other. Of course, this is one way to change the pricing perceptions of the consumers.

References

Kerin, R. A., Hartley, S. W., & Rudelius, W. (2015). Marketing. New York: McGraw-Hill

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