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Pricing Methods - Going-Rate/Competition

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A former co-worker now represents a company that manufactures a new type of laboratory-made gemstone, called ZC, which is similar to, but better than, cubic zirconia. These gemstones are used in rings, pendant type necklaces, bracelets and pins which your firm designs. While they have begun to sell their ZC jewelry to selected stores, they have just received an invitation to sell their ZC products on one of the largest television home-shopping networks in the United States with the potential, if the products sell well, for an airing on the network's European show. Your friend's company must now determine the best pricing method for their products in this environment.

The television program has given them complete control over how your products will be priced.

Evaluate and determine the advantages and disadvantages for this special marketing situation of:
- Going-rate or competition-based pricing
- Perceived-value pricing

Be sure to share
- any personal experience you have with any of the other pricing strategies for ZC jewelry that you did not choose to evaluate, and
- any suggestions for new potential pricing methods, or
- any pricing strategies which combine several pricing methods

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Solution Preview

Prices are the direct, internal, variable, perceived costs involved in consuming a good, that is, the factors that directly affect decisions by individual people and organizations (called firms) concerning what goods and services to consume. Thus Pricing is deciding the consideration that customer has to pay in lieu of the organization's goods and/ or services. It means deciding the right price which consumer has to pay including discount structure. When deciding the price, marketers must always be thinking of whom their target markets are. They must understand the wants and needs of the ...

Solution Summary

350+ words show how to use going-rate/competition-based pricing and percieved-value pricing to price a new product.