Ch 6 Small Business Marketing, Product & Pricing Strategy Analysis

This assignment analyzes the concept of transparency pricing in the context of small business marketing. It assesses the future of transparency pricing and its potential impact on branding, considering factors such as ethical sourcing and consumer perception. The assignment differentiates between price and cost, exploring the various elements that contribute to each, including fixed and variable expenses, supply and demand, and the quality of the product. It also examines why consumers might be willing to pay a premium over the cost, focusing on brand perception, perceived benefits, and the overall customer experience. The analysis references relevant articles and case studies, such as Starbucks, to illustrate the concepts discussed. The student argues that transparency pricing is not a threat to branding and can attract customers by making it part of their branding process.

Running Head: MANAGEMENT 0
Management of Small enterprise

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Q. Asses the future of “transparency pricing”. Is it a threat to branding? What exactly is
difference the between price and cost? Why might a consumer be willing to pay much more
than the cost?
Answer- Transparency pricing is that pricing where buyer as well as seller both parties knows
the price of product. IT helps the seller to justify their price tags to the customers. However,
the shoppers who offer the product at low cost do not affect too much the transparency price.
The sellers who offer product at higher prices usually use this pricing strategy (Nagle &
Müller, 2017) It becomes easy for them to justify their prices of the product. I do not think
that transparency pricing is the threat to branding. It can become the threat for small firms by
sourcing of many of the pricing such as using the cheap labour (INSEAD Knowledge, 2019).
It is also true that firm cannot exactly make the estimation of the fixed cost as seen in the
article given.
The tactic of transparency pricing can easily attract the customers by making it as part
of their branding process. Similarly, it is mentioned in the article. Several discounted
companies such as Zara, H & M, and Forever 21 are successful in gaining the trust of
customers (Mirabi, Akbariyeh & Tahmasebifard, 2015). Therefore, it is proof that
transparency price is not prove to be the threat for branding.
Cost includes all those expenses that are incurred for making any product or offering
any service. Cost at the manufacturing might include all the raw materials that are used in
making the product. Cost of any product includes both fixed a s well as variable expenses.
Therefore, the amount of cost that is incurred in making the product puts direct impact on the
price of the product (Accounting Coach, 2019). As compare to the cost, price is that amount
that customer will be willing to pay for any of the product or service. The price of any
product directly depends on the supply or demand for the product. It also depends on the
quality of any product. The perception of any customer regarding the product directly
depends on the easily availability of the product, higher and premium quality, or the brand
name that is kinked with the product induces the customer to buy product even at the high
price. In addition to this, when customers receive more than just the product, they make
purchase of such product irrespective of its price (Christensen, Dillon, Hall & Duncan,
2016). For example- Starbucks is able to sell its coffee in higher price due to its quality and
perceived brand by the customers. Sometimes, customers also think that the benefit of the

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product will definitely outweigh the price, they are willing to pay for that (Mirabi, Akbariyeh
& Tahmasebifard, 2015).

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References
Accounting Coach. (2017). What is the difference between price and cost. Retrieved from:
https://www.accountingcoach.com/blog/cost-and-price
Christensen, C. M., Dillon, K., Hall, T., & Duncan, D. S. (2016). Competing against luck:
The story of innovation and customer choice. Harper Business.
INSEAD Knowledge. (2019). Who benefit from transparent pricing. Retrieved from:
https://knowledge.insead.edu/strategy/who-benefits-from-transparent-pricing-9101
Mirabi, V., Akbariyeh, H., & Tahmasebifard, H. (2015). A study of factors affecting on
customers purchase intention. Journal of Multidisciplinary Engineering Science and
Technology (JMEST), 2(1).
Nagle, T. T., & Müller, G. (2017). The strategy and tactics of pricing: A guide to growing
more profitably. United Kingdom: Routledge.