Response to the following problem:
Product A: The market for this product is highly competitive and the product is ordinary. The major competitors add a profit margin of 20% on the production costs to determine the selling price. The average production costs is K250 per unit which is considered to be very high.
Product B: GG holdings Plc controls over 98% of the market share for this product and its competitors are very small. The production costs is K310 per unit and the Chief Financial Officer has advised that a make-up of 35% on full cost should be added.
Product C: The market research recently conducted for this product indicated that most customers are interested in the quality and taste of the product. The average production costs is K210 per unit. Some customer are will to be charged 40% margin of the production costs and others 45% make-up on full cost.
Required:
Discuss the appropriate pricing approach that GG holdings Plc can adopt for pricing each of the three (3) products.
Determine the selling price of each of the three (3) products.