ASSIGNMENT ON MANAGERIAL ECONOMICS
online distribution channels.Competitors may define your price range. In thiscase, you can price higher if consumers perceiveyour product and/or brand is significantly better; price on parity if your product has better features; or price lower if your product hasrelatively similar features to existing products.An information client faced this situation with a premium product. Its direct competitorsestablished the price for a similar offering. Asthe third player in this segment, its choices were price parity with an enhanced offering or a lower price with similar features.
Examine market pricing and economics.
A paid, ad-free site should generate more revenuethan a free ad-supported one, for example. Inconsidering this option, remember to incorporatethe cost of forgone revenue, especially asadvertisers find paying customers moreattractive.
Calculate the internal cost structure andunderstand how pricing interacts with theoffering.
I recommended a content client promote its advertising-supported free e-zines toincent readers to register. The client believed thee-zines had no value as the content wasrepurposed from another product, so it didn'tadvertise them. Yet the repurposed content wasexactly what readers viewed as a benefit. Byundervaluing its offering, the client missed anopportunity to increase registrations and, hence,advertising revenues with a product thateffectively had no development costs.
Test different price points if possible.
This isimportant if you enter a new or untappedmarket, or enhance an offering with consumer-oriented benefits. To determine price,MarketingExperiments.comtested three
RAHUL GUPTA, MBAHCS (1
SEM), SUBJECT CODE-MB0026, SET-2Page