Page 38 - MARKETING & PUBLIC RELATIONS EBOOK IC88

their experiences the services provided. The comments, to be useful, should be precise at
detailed. If someone says, "I was waiting for a car. The driver had reported to the Reception, but
I got no information. When I checked with Reception, I was told that no driver had come. I lost
more than 7 hours", there enough data to pinpoint failure and make correction.
2. A complaint is an indication of inadequacy, which may be due to

 design of the delivery system
 the customer himself neglecting instructions
 faulty perceptions

3. There is always scope for improving conformity by customers to instructions through

 removal of ambiguity
 prominent display of communications
 adding illustrations for better understanding

G. PRICING

(a) Production costs

1. Normally, in the case of goods, price is determined by adding to the cost of production
(including distribution costs), a margin for profits. In the case of services, the cost of production
is often difficult to determine. In the case of insurance, however, the cost can be determined.
That includes the costs of running the office, plus, most importantly, the claims incurred in the
business. The premium, being the price of insurance, is based on these costs plus margins.

2. In many marketing situations, the price is a matter for strategic decision. The price carries
images of the quality of the product concerned. Low price means the product is `cheap', not
only in money terms but also in status, prestige and durability. High price has the opposite
connotations. Those who introduce a new product for the first time may charge a high price so
that they can recover as much as possible of the development costs, before competitors come
up with similar products and force a fall in prices. This is called the skimming strategy.

3. Another strategy is to charge the lowest possible price. There are two consequences. One is to
attract some part of the market or may be even to capture substantial part of it. Another is to
see that competitors, unable to stand the financial squeeze, exit the market. This is the
penetration strategy. It is also called 'predatory' pricing, meant to kill the competition. Having
captured the market, the price can be raised again.

4. Sometimes competitors come together to charge agreed prices. This is collusion pricing
intended to share the market. This may happen for example, when a big buyer like the
Government, is asking for tenders for supplies. The contending suppliers may agree to share the
total order between themselves. and quote agreed prices. Those who are part of such
agreements are said to have formed a cartel.

(c) Price Elasticity

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