Marketing of the Augustine Medical Inc - Essay Example

The company is forced to determine the price of the system to be able to prepare the price literature that would be given to distributors and also the price would be used at a medical trade show where the product will be unveiled for the first time. The company should consider the following factors when deciding on the price of the product. The company should, first of all, get to know the cost of assembly. This will include, the salaries paid to their staff, rent, and other miscellaneous costs. The company should then get to know how much marketing and research will cost them. The two are extremely important as they will help the company to get to know its competitive advantage over its competitors. It will also help determine the most suitable way of marketing their product to get the best results and increase their sales.

The company should also consider the price of similar products offered by their competitors. If the company is to make a lot of sales, it should consider pricing its product slightly lower than those of its competitors. The company should consider the discounts that will be offered to their sales distributors. Already the company has decided to offer a 30% discount on the selling price to their distributors for every sale they make of the Bair Hugger Patient Warming System. The company has also decided to offer its distributors a 40% discount on the selling price of disposable blankets.

The final and most important thing the company should consider is its profit margin. The profits should not be too high or too low. A low-profit margin might make the company incur losses in case of any unprecedented economic event. A high-profit margin on the other hand would make the company overprice its product and end up incurring losses altogether since hospitals will shun its products. Hospitals are always looking for the most effective, cost-effective products to use on their patients (Schindler 77).

So far preliminary estimates show that the cost of assembling one Bair Hugger Patient Warming System product is 380$ while the cost of manufacturing the disposable blanket is approximate would be $ 0.85. Considering all the above factors the price of the product should range between $ 1000- $ 1500. This will cover the 30% selling price discount given to distributors. It will also cover the company’s expenses rent, salaries, electricity, and marketing. The company will also be able to enjoy a good profit margin (Schindler 45).

The price is also suitable for prospective buyers since it is significantly lower than that of their main competitors who offer the same kind of products. The price of the disposable blanket should range between $3 - $4.