You are considering a price change for an established product sold by your firm.

Question

1. You are considering a price change for an established product sold by your firm. Write a memo analyzing the factors you need to consider in your decision.
2. Janet Oliver, owner of a mid-priced dress shop notes, "My pricing objectives are simple: I just charge what my competitors' charge. I'm happy because I'm making money." React to Janet's statement.
3. What is the difference between a price strategy and a price tactic? Give an example.
4. What are some of the ways that social media has changed your daily life ? What can marketers take advantage of for their promotional purposes ?
5. What are some of the tools businesses can use to measure social media ? How effective are these tools ?

Explanation / Answer

1.) Some factors which need to be analyzed before considering price change are:

Price elasticity of demand of your product.

Availability of close subsitutes and complements.

Output capability firm to meet new demand level.

2.) In a perfect competition market the price a firm can charge is equal to the market price. But the clothing shop is better characterised by monopolistcal competition as different shops offer somewhat different products. Hence the price charged can be a bit higher.

Even if Janet's making money she may be suffering economic loss if the oportunity cost with running business is greater than money she is making.

3.)

Pricing Strategies
These are adopted over the medium to long term to achieve marketing objectives They have a significant impact on marketing strategy.

Pricing Tactics
These are adopted in the short run to suit particular situations. Tactics have only limited impact beyond short-term sales of the product itself.

Offering discount on products as a clearance sale is a price tactic, while adopting a price leadership model is a price strategy.

4.) Social media has become an integral part of life today. We put information about ourselves like what we like, what are we watching, where are we going, which product we like etc. The marketers often use this information to develop personalized advetisements targeted according to your profile. So if you often upload sports photos and like sports website etc. , a advertiser may showcase advertisement about sports goods, upcoming sports shows etc.

5.) Businesses can measure social media effectiveness in the following ways:

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