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Why can Prada sell a handbag for $2,000 that costs the firm a little more...

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Accounting

Why can Prada sell a handbag for $2,000 that costs the firm a little more to manufacture than the $200 bag sold at a department store? At the other end of the pricing spectrum, why would a consumer goods company provide a coupon that makes their new snack product all but free? We learned in the text that there are a number of pricing strategies firms can use to achieve their marketing objectives. Do they want to build market share, create a perception of exclusivity, or simply get you to try those new cookies?

Consider the product you are using for your marketing plan. How would you price it to achieve your objectives? Describe the pricing strategy you would use to introduce your product to the market, and why you selected that strategy over other options. Is your choice a long-term or short-term strategy? What advantages or disadvantages do you foresee? Suppose that sales are not meeting your objectives, what change might you make in your pricing?

By the way, that $2000 Prada bag may seem like lot of money for a simple handbag, but it is not even close to top of the pyramid. For that, check out the Tanaka designed bag sold by Hermes for a staggering $1.9 million. Why not order two?

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