Carmex Case

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The first time buyer is more than likely going to pursue something that provides good value and priced reasonable or on the lower side. A brand name is important that will provide some re-sale value for purposes of trading for a better guitar if they stick with it and are good at guitar playing or if they decide to never play again. The guitar quality would need to rank average to good. The musician is going to want a prestigious name, well designed and unique physical appearance with above average to stellar sound quality. They probably won’t give price too much of a thought. I think an example of this would be the first time home buyer vs. someone that is on their second or third home purchase. When we purchased our first home we…show more content…
For Washburn, what are examples of (a) shifting the demand curve to the right to get a higher price for a guitar line and (b) pricing decisions involving moving along a demand curve? Movement to the right occurs with the signature guitars by establishing an inelastic, price-insensitive demand for the product. Mr. Abel’s analysis of whether he should set the unit price of the new line of guitars at $299, $329, or $349 is an example of moving along the demand curve. These are variable points along the demand curve, not a different…show more content…
Which of the four approaches to setting a price does Carmex use for its products? Should one approach be used exclusively? Carmex uses all four approaches to setting their pricing. These are consumer demand, production and material cost, profit goals, and competition. Carmex primarily allocates their resources toward the demand orientated approach. Carmex effectiveness really is based on all four approaches so they really cannot use one single method. 2. Why do many Carmex product prices end in 9? What type of pricing is this called? What should happen to demand when this approach is used? Carmex uses the odd-even paradox approach. The approach is based on manipulating the perceived price psychology of the consumer by lowering the leading number. The paradox causes consumers too passively and subconsciously to view the product at a lower price and in turn in impact product demand. Wal-Mart uses this roll back pricing methodology all the time. When you see anything starting with a lower number you don’t pay much attention the numbers following the decimal point. You see it in home sales, vehicle sales, and grocery stores. I get this game so I usually don’t let that sway
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