Miel Cañete

Raesl Vien Somuelo COMT2C - OPM104_C

1. Given the pricing views of the three department head, what price would you
set? Why?

We understand Mr. Inocencio’s proposition. However, we cannot price the

product at a premium because we must first understand the level of price sensitivity of
our customers and by how much are they willing to pay for our product.

Taking in consideration that Alkasure is already gaining popularity in the

market due to it’s door-to-door delivery. Penetration strategy suggested by Ms. Bea
would be out of the picture.

We agree with Mr. Yno’s recommendation to set the price not too high and
not too low. But since the business offers door-to-door delivery, we would suggest an
additional fee to cover for the expenses.

After hearing the three department heads and weighing each of their opinions
regarding the pricing strategy that Alkasure will be using, we would consider meeting
the middle ground - pricing the product within the range of Php 410.00 - Php 420.00.
We believe it would be enough to cover the cost of the product, the expenses incurred
with door-to-door delivery, and to gain profit as well.

2. Would it be deterrent for the company to sell the products at a higher price
compared to its competitors? Why?

3. What would be the impact to your customers if you price it low at first then
gradually increase prices? What are the things that you need to consider when
you give price products at a lower price?

4. What are the factors you need to consider when setting prices?

Coming up with the appropriate price is not as easy as adding the profit the
business wants to the expense they incurred to arrive at the final price decision. A
business must consider the costs involved in making the product, customers’ price
sensitivity and the value they receive, competitors’ price, how the product is
positioned in the marketplace and lastly, by how much profit does the business want
when setting price for the product.

5. Given the nature of the product, what market structure are you operating?
Will this impact your pricing decision? Why or why not?

We believe that we are operating in an “Oligopoly”.In “Oligopoly”, there is a small

number of businesses which have market power meaning that they can influence the
price in the market. The definition fits well as how Ms. Bea explained that they have
Miel Cañete
Raesl Vien Somuelo COMT2C - OPM104_C
lesser competitors and Mr. Yno describe the market condition where he suggested to
follow the prices that was set the competitors.

Amo ni answer ka friend ko oh sa 2 and 3 PARAPHRASE LANG NGA INDI

HALATA HAAHHAHAHAHAAHHAH

2. Would it be deterrent for the company to sell the products at a higher price
compared to its competitors? Why?

Theoretically, pricing products higher than your competitors' would drive away
customers, but in the real world, pricing is more complicated and nuanced than that.
In this case, depending again on the customer profile, their perceived value of the
products, and their price sensitivity, pricing a little bit higher might not make that
much of a difference to the size of the market share because Alkasure has a
differentiating feature of direct-to-door delivery that customers might not mind paying
extra for.

3. What would be the impact to your customers if you price it low at first then
gradually increase prices? What are the things that you need to consider when you
price products at a lower price?

At first many customers will be attracted to the low prices, but eventually when the
firm decides to increase prices, naturally the number of customers will decrease.

When pricing products at a lower price, one must consider the costs and whether or
not the business can pay for them or how long until the business can make up for
them.

Another thing to consider is the profit margin. Pricing products lower will usually
result in a lower profit margin compared to if the business priced their products
higher. But this can also change if the business can sell significantly more lower-
priced products in volume so as to exceed the profit margin of higher product prices.