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Sticker Price and Pricing Strategy in Cars

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Need help discussing the following: Columnist Dave Barry jokes that federal law requires this message under the sticker price of new cars: "Warning to stupid people: Do not pay this amount." Discuss why the sticker price is generally higher than the actual selling price of a car. Tell how you think car dealers set the actual prices of the cars they sell. 250 word minimum.Cite work.

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Please refer to the attached file for the response.

STICKER PRICE, ACTUAL SELLING PRICE, AND PRICING STRATEGY: THE CASE OF CARS

How do companies set price?
According to Kotler and Keller (2006), companies do their pricing in a variety of ways. In small companies, prices are set by the boss or the owner. In large companies ( e.g. car manufacturing), pricing is handled by division and product-line managers. The top management sets general pricing objectives & policies and approves the prices proposed in the lower levels of management.

Why the sticker price is generally higher than the ...

Solution Summary

This solution explains sticker price, also known as manufacturer's suggested retail price ( MSRP) and describes it in terms of how it is determined. Since it is normally negotiable, the actual selling price becomes lower. In the case of cars/automobiles, pricing policy is determined by considering key factors such as pricing objective, pricing method, demand, costs, and competitors' price, costs, and other offers. This reporter believes that perceived-value pricing method is utilized.

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