CHAPTER 6.1

• By the early 1990's, the people's car program, a government initiative to introduce low-cost automobiles to the market, led to the entry of a host of new automobile brands.
• Up until the end of the Martial law era, there were only three car brands in the country: Toyota, Mitsubishi, and Nissan.
• Kia became an early entrant into the market with its highly successful model, the Kia pride
• Hondo was a producer of cars that were at a slight premium compared to other mid-price vehicles.
• Honda chose to bring in the two-door Honda Civic-acar which normally would be soldd at a loss if priced below 200k pesos.
• “Price should never be just about cost plus markup. It should also be a tool for

  communication and for strategy."
• SRP means Suggested Retail Price
• Suggested Retail Price denotes the price that a consumer product is expected to be sold at over the counter and in stores
• Suggested Retail Price is a socio-cultural phenomenon that both parties are expected to respect and abide by.
• Mass production and transporation altered merchandisers approach to pricing.
• Mass production which led to wider access to cheap goods that are sold in bulk, as made possible by factory-based processes.
• transportation. The emergence of long range mechanical transportation systems would provide merchants with access to a far wider variety of goods than was ever before possible.
• Fixed price policies where each store item would have a price that has been set beforehand.
• Department of Trade and Industry controls the prices of essential commodities by managing a list of wet market and supermarket prices for a critical basket of goods that includes canned sardines, rice, coffee and cooking oil, among others.
• Typical breakdown of an automobile's SRP in United States:

  Horizontal: Cost category, Cost contributor, Relative to cost of vehicle manufacturing, Share of MSRP

  Vertical: Cost category, Vehicle manufacturing, Production overhead, Corporate overhead, Selling, Sum of costs, Profit, Total contribution to MSRP
• Before setting the final retail price for a product, proper due diligence should be done in order to ensure that all possible costs are accounted for.
• Based on table 4,

  2.5 percent of SRP goes back to the manufacturer as profit. Much of the margin (around 45% of SRP) goes to necessary expenses such as the cost of selling (23.5%) company overhead (7%), and even warranty expenses (5%).