Question
GLOSSI is a shampoo brand focusing on a niche segment of customers with frizzy or curly hair. For years, the pricing strategy of GLOSSI has
GLOSSI is a shampoo brand focusing on a niche segment of customers with frizzy or curly hair. For years, the pricing strategy of GLOSSI has not been based on marketing research and careful strategy selection, but on the gut feeling of the marketing director. The regular price of GLOSSI is $19 for a 950ml bottle ($2/100ml), matching with most of the other shampoo brands available in supermarkets. The price range for shampoos available in the market is $1 to $12/100ml. The sales of GLOSSI have been declining and the marketing director wants you to re-think the pricing strategy of the brand. The marketing director has heard of cost-based pricing and value-based pricing and that "customers are highly sensitive to prices" is a myth but does not understand the concepts.
Please outline and explain the following:
(1) cost-based pricing;
(2) value-based pricing;
(3) why "customers are highly sensitive to prices" is a myth;
(4) recommended pricing strategy for GLOSSI, reasoning, and essential business activities to support the recommended pricing strategy.
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