Page 597 - Business Principles and Management

Chapter
22 Pricing and Promotion

22.1 The Business Buying Decision

22.2 Pricing & Costs

22.3 Promotion

RE ALITY CHECK

Why Pay More?

ichi and Arturo walked out of Windzors, a sporting goods store that
had just opened in the new Regency Park shopping plaza. “I can’t be-
Mlieve that store will be successful,” said Michi. “I’ve never seen sports
equipment priced that high!”
“The products really were expensive,” agreed Arturo. “But it certainly
isn’t a normal sporting goods store. The salesperson said they would help
design your own set of personalized golf clubs and that you would get five
hours of lessons with the golf pro at the Regency Sports Center if you pur-
chased a set of clubs.”
“Did you see the area where they sold downhill skis?” asked Michi.
“They had a moving slide like an escalator where you could actually ski.
They also had a machine that formed molds around your feet for custom-
fitting ski boots. They sponsor a ski club and organize vacations to the
mountains in the United States and even to other countries. I’ve never seen
that in a sporting goods store.”
“Why would people want to pay that much?” Arturo wondered. “Sure,
they have the top brand names and unique services. But you can get the
same type of products for 40 to 50 percent less at other stores.”
“I don’t know,” said Michi. “They certainly have effective advertising,
sales brochures, and customer service. And the store was filled with people.
Maybe the owners are on to something.”
A business is successful when it brings buyers and sellers together and
they are both satisfied with the exchange. To be successful, businesses must
offer the type and quality of products and services that meet the needs of
their customers. The products must be priced so that buyers consider them
a good value for the money.
Whether the buyers are businesses purchasing raw materials to use in
manufacturing, equipment to operate the business, or products for resale, or
consumers buying products for their own use, they must have information
to make their decisions. Buyers must be aware of the products, how the
products will meet their needs, and where they can buy them. Then buyers
and sellers must agree on a price and method of payment. In this chapter,
you will learn about the last two elements of the marketing mix: pricing and
584 promotion.