PRICE

Pricing decisions are almost always made in consultation with marketing management. Price is
the only marketing mix variable that can be modified quickly. Price variables such as dealer
price, retail price, discounts, allowances, payment period and credit terms influence the
development of marketing strategy, as price is a major factor that influences the appraisal of
value achieved by customers.

Costumers directly relate price to quality. Cool burst, which is a new product that will enter the
Philippine market, shows a lot of potentials to its possible consumers.

To be able to determine how many units of each flavor will be produced in a production run, a
survey will be conducted among the most commercialized cities in the National Capital Region
(NCR), namely, Makati, Mandaluyong, Quezon, Pasay and Manila. The initial production
quantity of each of the three flavors will be in proportion to their respective ratio in the results of
the survey. Subsequently, equal number of units for each flavor will be produced.

The group has planned to initially produce 10,000 units, comprising the three flavors. The data
below represents the budgeted manufacturing cost of the total units.




BUDGETED PRODUCT/MANUFACTURING COST
Raw Materials
Coconut
Melon
Watermelon
Ginkgo Biloba
Plastic Bottles
Plastic Caps
Plastic Labels
Labor
Manufacturing Overhead
Indirect Materials
Indirect Labor
Factory Utilities
Total Manufacturing Cost

Cost per Unit = Total Manufacturing Cost / 10,000 units
Initial Mark-up per Unit: 5%
Subsequent Mark-up per Unit: 10%
Selling Price per Unit: Cost per Unit + Mark-up


DITO KO MUNA LALAGAY YUNG BUDGET AH
ANNUAL BUDGET
Sales P 193, 550.00
Cost of Goods Sold `
Operating Income P
Operating Expenses
Net Income P 5454.76
SALES BUDGET
Sales
Sales Discounts
Sales Returns and Allowances
Net Sales

COST OF GOODS SOLD
Cost of Goods Manufactured
Ending Inventory
Cost of Goods Sold

OPERATING EXPENSES
Selling Expenses
Advertising Expense
Delivery Expense
Salary Expense Selling
General and Administrative Expense
Salary Expense Admin




Cool burst, as a premium product, depicts a premium price too. In the way we
intend to set the price of the product, we decided to use Cost-Based Pricing because we find the
said strategy the most reasonable one. Since the actual costs of the materials used to produce the
product were accurately determined, the output itself would surely justify its selling price. This
product, which is designed for refreshment and memory enhancement, will initially costs about
Php 19.75 per bottle. This will give us a clear edge from our competitors, namely, Fit and Right
which costs Php 23 and Minute Maid, which costs Php 22 . This price is right for our target
market which is the people under classes B and C. Then after the product has already established
its name and increased its market share, approximately after two quarters, we are going to
increase the mark up to acquire the amount that was forgone by initially selling at a lower price..
(iadd na competitor ung sparkling)

Discounts
Giving discounts is a way of persuading and encouraging customers to purchase products
which business entities offer, especially those which are still newbies in the industry. Hence, our
group agreed to offer discounts to increase our chance to attract loyal customers.
Since we are going to provide and deliver to other small and medium enterprises our
products in volume, cash and volume discounts will be offered to them. Volume wise, if they
will buy 50 bottles, 100 bottles, or 150 bottles and above in one order, they could avail 3%, 5%,
or 7% discounts respectively. On the other hand, if they are going to purchase our product on
credit, there are terms that will be followed regarding the payment. These will be: 2/10 and N/30.
(TENTATIVE PA LANG YUNG FIGURES JAN AH. :D)

Allowances
In the real world, there may be unexpected events that may happen which include the
changing of buyers decision about purchasing products and returning those back to the
respective sellers. Instances may be, there were defects found in the products or problems about
the quality which the sellers themselves do not thought of having on their products. With that, we
have already expected that there may be returns and allowances that we should assume.
Therefore, we plan to give our customers a period of time in which they may return products
they have purchased if they wished to. It would be five days after the products have been
delivered so that we could immediately replace those which they found defected. But in spite of
that assumption, we can assure of future customers that we will do our very best to supervise the
production of our products to avoid contingent deficiencies.