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Price Settings
(A)Which of the four approaches to setting a price does Carmex use for its products?
(B) Should one approach be used exclusively?
(A&B) Price Setting Efficacy
Carmex effectively utilizes all four approaches to setting product prices. The
products supplied by Carmex are highly elastic in demand. The elasticity of demand
is derived from a plurality of metrics such as costs, quality, and substitute products.
However, due to this elastic demand of Carmex products, Carmexs must primarily
allocate their resources towards a demand-oriented approach. On the contrary,
Carmexs success is predicated upon the effective utilization of all four of these
approaches rather than a singular approach.
a. This methodology yields a higher pay-off for the marketing team if the data and metrics
were to be dependent on qualitative data. Theoretically this approach would be
represented by brand loyal consumers that will have a higher influence on the overall
demand for the products. This allows for a greater access to prudential rationales based
upon their target selections. In addition the ability to track the demographic and actually
engage with the individuals personally is extremely valuable. This extends the capacity to
track metrics and trends amongst the individuals whom engaged with the activity.