Page 1 of 3
Marketing is concerned with pricing, promotion budgets, sales budgets and sales forecasts.
4.2.1 Pricing Sensors
Price was discussed in 3.1.2 Pricing. To review, appeal falls to zero when prices go $5.00 above the expected price range. Price drives the product's contribution to profit margin. Dropping the price increases appeal but reduces profit per unit.
Segment price ranges fall at a rate of $0.50 per year. For example, in Round 0, Traditional customers expected a price between $20.00 and $30.00. In Round 1, the Traditional price range will be $19.50-$29.50; Round 2, $19.00-$29.00, etc. This puts pressure on companies to improve their cost structures.