Question

For this assignment, choose a product (good or service) that you would like to evaluate for pricing.. Once you have chosen your product, please answer the following questions: 1. Does the price elasticity of demand of this product. Is it elastic or inelastic? Why? 2. What kind of pricing strategy is used for this product (for instance, fixed pricing, high/low pricing, Manufacturer Suggested Retail Price, etc.)? 3. Does the pricing for this product vary among channels (for instance, is the price different online than in-store)? 4. Does the price of this product help to build perceived value, or is the price something detrimental to the product (in other words, do you think the price is appropriate- why or why not?

Answer 1

ANSWER - The product I am choosing is SALT. The price elasticity of demand of salt is inelastic because salt is the main ingredient of the diet of the person and any changes in the prices of the salt will not affect the demand for the salt in the market.

The salt is manufactured by many companies under different brand names and hence the pricing strategy is not fixed. The prices are set by the manufactures who keep in mind their different profit margins and the valuation of their brands. Hence the prices are the MANUFACTURER SUGGESTED RETAIL PRICE. The salt is mainly the packed product and hence the sale of the salt is done based on the printed MRP upon the packet.

So the prices online and in the store do not differ except the offers of discount run in the name of the sales promotion by the stores. The prices of the salt of many companies are not up to the mark. They charge more prices than they should in the shade of the superior brand names but the ingredients in the salt of mostly all the brands are same and why to charge the different prices for the same product and taking advantage of the inelastic demand for the product.