Pricing Strategies Analysis and Preference

This assignment delves into various pricing strategies employed by businesses, including markup, target-return, perceived-value, going-rate, and auction-type pricing. The focus centers on analyzing the strengths and weaknesses of each method from a consumer perspective. The assignment culminates in a personal preference for value pricing based on its ability to offer high quality products at fair prices, appealing to a consumer's desire for both value and affordability.

University of Chittagong
Chittagong University Center for Business Administration
Faculty of Business Administration, University of Chittagong.
ASSIGNMENT ON
1. Take a position: Price should reflect the value that consumers are
willing to pay versus Price should primarily just reflect the cost
involved in making a product or service.
2. Think of the various pricing methods. As a consumer, which
method do you personally prefer to deal with? Why? Evaluate the
remaining methods and explain why those are not preferred.
Submitted To
Name: Dr. Fuad Hasan
Designation
:
Associate Professor,
Department of
Marketing, University of
Chittagong
Course
Code:
623
Course Title Marketing Management
Submission
Date
09.10.2020
Submitted BY
Student
Name:
Muhammad Jahid Hasan
ID: BG203071238
Semester: 2nd
Section: BG(17th Batch)
Session: 2019-2020

Assignment-1
1. Take a position: Price should reflect the value that consumers are willing to
pay versus Price should primarily just reflect the cost involved in making a
product or service.
Position:
Price is the one element of the marketing mix that produces revenue, the other elements
produce costs. Price is the amount a customer pays for the product & it is the assigned
numerical monetary value of a good, service or asset. Above this debate, I take position on
“Price should reflect the value that consumers are willing to pay”. I also show the reason
why I will not take position on “Price should primarily just reflect the cost involved in
making a product or service”.
When a producer launched a product in the market, its main target is to achieve customer
satisfaction. Without customer satisfaction, product will be elimination in market. So, when
producer launched a product in market, he should focus on customer want & demand. So,
producer should research on market. Producer also should research on consumers. In a
market, consumers has different types and many types of consumers has different needs, want
& demand. So, producer should concern to launch a product based on consumers. Because
when a new product launched in a market, it also should have enough certain consumers.
That product also should have enough demand in that market. So, producer must properly
research on market where he will want to launch his product. Producer should be enough
assure that his product doing good perform in market.
If producer will do properly research on market and consumer then he should focus on price
of product. It is very important issue to fix price on product. To fix price, he should focus on
consumer ability to buy his product. The cost is involved when he made a product. The
market is very competitive and competitor is increasing day by day. In first, if he fix his
product price based on his making cost. Then it has risk to take place in competitive market.
Because it looks too much price if he fix his product price based on product making cost. So
producer should be concern to fix price on his new product.
Producer first intention should take place in market. So producer should carefully fix his
product price and try to make consumers attention to his product. It is also important for his
new product to take necessary steps to advertise his product in print and electronic media to

reach his new product launched news. He should understand what types of product price that
consumers are willing to pay. If producer firstly fix his product price based on product
making cost & have intention to pick up making cost. Then product will be higher price than
other company product. So producer first intention is to take place in market. So he should fix
price what consumers are willing to pay. Consumer satisfaction is very important to be
success in a competitive market. If producers makes strong consumers satisfaction, then it
will be easy to take place in market. When producers makes a strong position in market and
gain extraordinary consumers satisfaction then after gradually he will rise his product price. If
consumers will satisfy producer product, then he will also be willing to buy this product even
after rise of product price.
A producer should fix his product price that consumers are willing to pay. If producers show
respect on consumers willing, then he has enough chance to success in competitive market.
If price just reflect the cost involved in making a product and producers fix product price
based on cost involved in making product. Then it has risk to success in market because it has
possibility to be high price in market. When a new product entered in the market, others
company existing product will also remain exist in same market. If firstly fix price based on
cost involved in making a product then it will be tough to take place in market. Consumers
are always willing to low price. If they saw producers new product price is not so cheap than
others existing product, then they will not be so interested to buy this product. So producer
should be given attention to consumers what they are willing to pay. If producer will gain
consumers satisfaction on product and product price then it will be easy to make strong
position in a competitive market.
So I will take position on Price should reflect the value that consumers are willing to pay. I
will not support Price should primarily just reflect the cost involved in making a product or
service.

Assignment-2
2. Topic: Think of the various pricing methods. As a consumer, which method do you
personally prefer to deal with? Why? Evaluate the remaining methods and explain why those
are not preferred.
Discussion:
Price is the quantity of payment or compensation for something. It is usually pays by the
consumers for goods and services. A business can use variety or one of pricing method for
their needs when selling a product.
Various pricing methods:
Companies select a pricing methods and pricing methods are six types. These various pricing
methods are-
1) Markup Pricing: In this method, a company first calculates their cost of the product, then
adds a proportion of it as markup. It is the most initial pricing method which is to add a
markup to the product cost.
2) Target-Return Pricing: A producer is looking to gain desired profit or rate of return on
investment is called target-return pricing. In this pricing method, a certain quantity of the
product is sold when a formula is used to calculate the price to be set for a product to return a
profit or rate of return on investment.
3) Perceived-Value Pricing: In this pricing method, the product price is setting based on
how much consumers are willing to pay on product. In this method, price is not based on
product making cost & delivery cost. Product price is based on customer perceived value and
their willing to pay. Perceived value is based on several elements such as product
performance, warranty, customer support, supplier’s reputation, trustworthiness etc.
4) Value Pricing: Value pricing is a pricing method where company offering their
consumers a fairly low price with a high quality product. It is not matter of just setting lower
prices, it is also matter of high quality product. This pricing method, company concerns to
become a low cost producer. But they did not sacrifice their product quality. They try to
attract consumer on their product by offering high quality product with fair price.
5) Going-Rate Pricing: In this pricing method, company fix their product price based on
their major competitor product prices. Firstly, company should properly analyze on market
and their competitor product price. Then they should fix their product price as same, more or

less than their major competitor product prices. Company should give discount offer on their
product to their customers and try to go advance against their competitors.
6) Auction-Type Pricing: In this method, price is based on auction. Price is fixed in this
method. By negotiation, the price is neither set nor arrived. It is the process of competitive
and open bidding. At present, this pricing method is increasing popularity for advancement of
the internet.
Method which I personally prefer:
As a consumer, I personally prefer Value Pricing Method. In value pricing method,
company offering their consumers a fairly low price with a high quality product. It is not only
matter of just setting lower prices but also matter of high quality product. Company did not
sacrifice their product quality. They also concern about fair price on their product. So,
company must concern about their product making cost because product quality with
relatively low price is also important factor to gain consumer satisfaction.
I personally prefer value pricing method as a consumer. Because in this method, company
keep their product quality level. As a consumer, I always want to a good quality product.
Value pricing method given me high quality offering product at a relatively low price. As a
consumer, when I want to buy a product, I always try to buy product with low price. In
pricing method, company offers me high quality product with a relatively fair price. This
pricing method fulfilled my all demand about product price and product quality. This pricing
method, company remain their product quality level and they also keep fair price which
attracts a consumer easily to buy their product. In this six pricing method, I think value
pricing method is more suitable for a consumer. That’s why, I personally prefer Value Pricing
method.
Now, I evaluate the remaining method and explained why I am not
preferred other remaining and why those are not preferred-
Markup Pricing: I didn’t prefer markup pricing method. In this method, a company first
calculates cost of their product, then adds a proportion of it as markup. Company calculate
their unit cost and then put on markup price. When put on markup price, it is sometime
difficult to determine an effective markup percentage. This pricing method is most initial
pricing method and somewhat complicated which is not comfortable for a consumer. That’s
why, as a consumer, I didn’t prefer markup pricing method.

Target-Return Pricing: I also didn’t prefer target-pricing method. In this pricing
method, producer or marketer determines the price based on investment. Target-return
pricing means, a producer or marketer is looking to gain desired profit or rate of return on
investment. This pricing method, marketer fix their product price based on their investment
which makes higher price on their product. Because marketer try to pick up their investment
cost on their product by imposing high price. Marketer try to gain quick profit. Which is not
suitable at all for a consumer. That’s why, as a consumer, I didn’t prefer target-return pricing
method.
Perceived-Value Pricing: This method, pricing strategy is based on how much
consumers are willing to pay for product. This pricing method is not based on product
production and delivery costs. Perceived value is based on several elements such as product
performance, warranty, customer support, etc. A marketer always try to pick up their
investment cost. But it is difficult in this method to pick up investment price. Consumer
always seek low price and different advantages like warranty, customer support etc. That’s all
requirement for a consumer, marketer are quite difficult to make product with distinctive
features. Even it is not possible to launch new version of existing product. Marketer always
try to gain profit, so they didn’t take like this risk. Consumer like me always seek updated
version product. But in this method, it is difficult to happen. So, as a consumer, I didn’t prefer
perceived-value pricing method.
Going-Rate Pricing: In this method, company fix their product price based on their
major competitor product prices. They charge their product price same, more or less than
major competitor product prices. In this method, price is ups and downs and not stable.
Because company increase or decrease their product price based on their competitors
movement. As a consumer, I want a stable and fair price. Price ups and downs is not good at
all. That’s why, as a consumer, I didn’t prefer going-rate pricing method.
Auction-type Pricing: It is competitive and open bidding process. Price is based on
auction and fixed. It has comparatively chance to price high. In this method, price is not fix
by negotiation. So, as a consumer, I didn’t personally prefer auction-type pricing method.