Thursday, March 4, 2010

Cost-based Pricing

Kotler describes cost-based pricing as "setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for its effort and risk."

Staples has started a new ad campaign that showcases their low prices respective to the industry. A customer is shown exclaiming that "wow! that's a low price!" at every item he sees. Then, one employee asks another employee how many products they have, and the reply is over 7000. The employee then goes and gets a cart for the customer. This implies that all of their products are low-priced, and that the customer is going to want to purchase them. They end with the line "Staples has low prices on everything you need for your office, and we mean everything." This explicitly states their low prices on everything that was implied earlier by the commercial. Staples is positioning themselves against their competitors as the "low-price" option for those who care about saving the most money.



Ian Robertson
Section E

2 comments:

  1. It is unclear that this is cost-plus pricing. They may be pinned to competitors' prices, or they may estimate a low perceived value.

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