1. Carmex uses demand-oriented, cost-oriented, profit-oriented, and competition-oriented approaches when setting prices. There is large amounts of information Carmex must consider when using these approaches. Carmex must produce products at prices people are willing to pay. Carmex’s demand approach uses consumer tastes and preferences to determine prices. Consumers want “value,” and Carmex must price products accordingly. Dropping a cent of the price of products so they end in a 9 makes it appear to the customer the products have greater value and achieves greater sales for Carmex.
Carmex uses the strategy of competition-based pricing. Specifically, Carmex employs the strategy of above-, at-, or below-market pricing. Carmex’s regular …show more content…
Packaging, ingredients, wages, and manufacturing affect the price. Carmex buys 12 million tubes of the original product and 2 million tubes of the premium brand. Carmex can purchase the tubes of the traditional product at a cheaper price. Economies of scale allow a manufacturer to produce the product at a lower cost, and manufactures give Carmex a discount for buying in larger quantities. Carmex’s method of packaging allows them to be more efficient, with the new packaging using 20 percent less plastic and still holding the same amount of product. The reduction in plastic lets Carmex cut down on shipping and materials costs.
Carmex uses multiple pricing strategies for its products. Each has its own benefit, and all should be utilized.
Cost should be a factor in Carmex’s pricing. The amount it takes to manufacture the product and how Carmex attempts to brand the lip balm both affect pricing. The traditional lip balm can be manufactured in greater quantities. This allows it to be produced cheaper. Carmex can then pass along the cost savings to its customers. The premium brand, Carmex Moisture Plus only has 2 million units produced compared to the 12 million of the traditional brand. The Moisture Plus’s lack of economies of scale and its use of upscale packaging increase manufacturing costs. Additionally, Carmex receives less of a discount on the premium brand because it purchases fewer of the units. This along,
Carmex uses the strategy of competition-based pricing. Specifically, Carmex employs the strategy of above-, at-, or below-market pricing. Carmex’s regular …show more content…
Packaging, ingredients, wages, and manufacturing affect the price. Carmex buys 12 million tubes of the original product and 2 million tubes of the premium brand. Carmex can purchase the tubes of the traditional product at a cheaper price. Economies of scale allow a manufacturer to produce the product at a lower cost, and manufactures give Carmex a discount for buying in larger quantities. Carmex’s method of packaging allows them to be more efficient, with the new packaging using 20 percent less plastic and still holding the same amount of product. The reduction in plastic lets Carmex cut down on shipping and materials costs.
Carmex uses multiple pricing strategies for its products. Each has its own benefit, and all should be utilized.
Cost should be a factor in Carmex’s pricing. The amount it takes to manufacture the product and how Carmex attempts to brand the lip balm both affect pricing. The traditional lip balm can be manufactured in greater quantities. This allows it to be produced cheaper. Carmex can then pass along the cost savings to its customers. The premium brand, Carmex Moisture Plus only has 2 million units produced compared to the 12 million of the traditional brand. The Moisture Plus’s lack of economies of scale and its use of upscale packaging increase manufacturing costs. Additionally, Carmex receives less of a discount on the premium brand because it purchases fewer of the units. This along,