Chatgpt critique (1)

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School

University of Texas *

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320

Subject

Marketing

Date

Feb 20, 2024

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pdf

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Uploaded by JusticeElectron13201

For the ChatGPT critique, I chose the pricing strategy prompt. Of the seven suggestions provided by the ai, I agreed with the responses yet as expected they were very broad but easy enough to understand for a new business owner who would want useful information for pricing strategies. The first of the suggestions I will be critiquing is “ Cost Analysis: Begin by thoroughly understanding your production costs. Consider the expenses related to materials, labor, packaging, and overhead. This forms the baseline for setting a viable selling price.” While this of course is valuable advice and correct, it fails to explain the importance of price to the seller (business owner) as revenue. Revenue minus expenses is your profit therefore you want to understand the significance of your materials, labor, and packaging. This is the initial baseline for their selling price and ultimately the businesses profit. A related concept is cost oriented pricing meaning the business applies a predetermined markup to its cost to make or obtain the product ultimately affecting the products price. This practice simplifies the pricing process but is less favorable. The second suggestion is “Value-Based Pricing: Highlight the unique features and benefits of your candles. If they have specific qualities, such as unique scents, eco-friendly materials, or longer burning times, leverage these points to justify a higher price. Consumers often pay more for added value.” This suggestion captures the broader concept of value oriented pricing, but completely left out the terms to further dive within that concept such as TEV, PV, and COGS. These terms expand the objective of value oriented pricing and explain true economic value, which is the value to a fully informed consumer who would ascribe value to the product. Perceived value of the product as perceived by the customer and inﬂuenced by the businesses marketing efforts and finally the cost per goods sold, which is the lower end of the price the business would be willing to sell. Two concepts that the ChatGPT response did not include that would be helpful for new business owners are that pricing must be considered along other factors such as place and promotion, not only product. This is helpful to businesses so that they dont only rely on a fair or modest price to create product sales, but to use other factors together to create a successful product line. Another concept: Products that are priced too high with little to no marketing outlay result in no unit sales, and high marketing costs along with low unit prices result in no profitability. The best place to be at profit wise is low price and low marketing or high price and high marketing. This is a very useful and easy to understand guideline on ways to balance price and marketing for a new business owner.

Finally, I believe that ChatGPT’s response is definitely helpful and did have a lot of the concepts we learned in class, the only ﬂaw being how broad the responses are making the website not as reliable as the general public may believe.

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