In response to Katie Longchamp's post

Can you think of some other products that have an inelastic demand?  Do you believe the consumer has any control over prices of products with an inelastic demand?  Why or why not?


Another example of an inelastic demand is heat. People need heat in order to stay warm during the winter, and sometimes the spring and fall. No matter what the price of heat is, society still finds it a necessity to pay for it in order to survive. I do not believe that the consumer has control over the price of heat. The more people that need heat in their homes, the more that it is going to cost the company to supply the heat. 

Pricing

During class this week, we talked about the concept of pricing. More specifically, the importance of price to marketing managers. Managers usually strive to charge a price that will earn a fair profit. To earn a profit, managers must choose a price that is not too low or too high, or in other words, a price that equals the perceived value to targeted customers. Trying to set the right price is one of the most stressful and pressure-filled tasks of the marketing manager. Trends in the consumer market attest:

- Confronting a flood of new products, potential buyers carefully evaluate the price of each one against the value of existing products.

- The increased availability of bargain-priced private and generic brands has put a downward pressure on overall prices.

- Many firms are trying to maintain or regain their market shares by cutting prices.

- The internet has made a comparison shopping easier.

- The United States was in a recession from late 2007 until 2009 and was still recovering very slowly in 2011.

How do you think marketing managers choose the appropriate price for a product? What factors do they take into consideration when setting a price?