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    MNC: Right price vs. fair price. Take a position and explain it.

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    You are a executive for a large multi-national corporation, meeting with general managers.

    Prices are often set to satisfy demand or to reflect the premium that consumers are willing to pay for a product or service. Some critics shudder, however, at the thought of $2 bottles of water, $150 running shoes, and $500 concert tickets.


    Prices should reflect the value that consumers are willing to pay.


    Prices should primarily just reflect the cost involved in making a product or service.

    Explain your position.

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    Solution Preview

    Prices should primarily just reflect the cost involved in making a product or service.

    Why we support primarily cost based pricing is that

    It is:
    1. easy to calculate
    2. minimal information requirements
    3. easy to administer
    4. tends to stabilize markets - insulated from demand variations and competitive factors
    5. ethical advantages

    That apart:
    v Law in several countries does not allow monopolistic pricing.
    v Loss leader is punishable in several countries.
    v Several countries impose restrictions on the prices that can be charged for selected essential items like food, medicine and education.
    v Taxes are levied by several ...

    Solution Summary

    The 443 word solution offers reasons for cost based pricing.