In order to attract the customers, different characteristics are added to the product, such as quality, size, colour, attractive package, alternative uses etc.
Their nature and behaviour for the purchase of a particular product, brand or service etc. The marketing mix should take into account what customers expect in terms of price.
For example, when a new offering is launched, its promotion costs can be very high because people need to be made aware that it exists.
But there is always a danger that the first impression triggered by the price point will either make the rest of the offering irrelevant or it will be a biased assessment. Common objectives include the following: Psychological pricing - base the price on factors such as signals of product quality, popular price points, and what the consumer perceives to be fair.
There is a threat of impending competition. Price Discounts The normally quoted price to end users is known as the list price. However, the following steps can act Pricing decision the marketing strategy a general guideline: However, pricing needs to be given its due attention since it has great impact on the rest of the activities and the company.
There is often a tendency for marketers to focus more on activities like promotion, product developmentand market research while prioritizing their responsibilities.
Or, would you go for a lawnmower somewhere in the middle? Similarly, if a company has to open brick-and-mortar storefronts to distribute and sell the offering, this too will have to be built into the price the firm must charge for it.
Understand the different pricing approaches that businesses use. Going-rate pricing is often used on commodity products such as wheat, gold, or silver. Marketing Strategy and the Marketing Mix Before the product is developed, the marketing strategy is formulated, including target market selection and product positioning.
A firm may have various objectives and pricing contributes its share in achieving such goals. The company aims to gather maximum benefit from premium users first and then slowly move down the chain to access all levels of consumer groups.
This will allow the company to introduce the product step by step to different layers of the market. If you buy chocolate bars or potato chips crisps you expect to pay X for a single packet, although if you buy a family pack which is 5 times bigger, you expect to pay less than 5X the price.
Quality leadership - use price to signal high quality in an attempt to position the product as the quality leader. The actual mechanics of pricing are dealt with at lower levels in the firm and focus on individual product strategies.
Furthermore, pricing affects other marketing mix elements such as product features, channel decisions, and promotion. Cumulative discounts may be offered to resellers who purchase large quantities over time but who do not wish to place large individual orders.
With less focus on profits, a company may focus on increasing revenues in order to increase market share and lower costs in the long term. Sometimes the customers are told the cheaper product is no longer available.
Promotional discount - a short-term discounted price offered to stimulate sales. Similarly, consumers sometimes bid on lots to build houses. Keeping in mind revenue and costs, a company may want to maximize profits. Large decreases in cost are expected as cumulative volume increases.
Firms may pursue a variety of value-oriented objectives, such as maximizing sales revenue, maximizing market share, maximizing customer volume, minimizing customer volume, maintaining an image, maintaining stable price etc.
Offering a different price for different consumers may violate laws against price discrimination. Once a firm has established its pricing objectives and analyzed the factors that affect how it should price a product, the company must determine the pricing strategy or strategies that will help it achieve those objectives.
For example, setting the price too low may risk a price war that may not be in the best interest of either side. Since demand is affected by factors like, number and size of competitors, the prospective buyers, their capacity and willingness to pay, their preference etc.
Maximize quantity - seeks to maximize the number of units sold or the number of customers served in order to decrease long-term costs as predicted by the experience curve.Pricing Decisions: Internal and External Factors (With Diagram) Article shared by: the effort will not succeed unless the price change is combined with a total marketing strategy that supports it.
A firm that raises its prices may add a more impressive looking package and may begin a new advertising campaign. The various consumers and. Pricing strategy in marketing is the pursuit of identifying the optimum price for a product.
This strategy is combined with the other marketing principles known as the four P's (product, place. Pricing Decisions Global Marketing Chapter 11 How to Set Price The global manager must global opportunities and constraints Global Marketing -Schrage Global Marketing -Schrage Market Price Strategy May make or break your profitability May not be able to use the same strategy Internationally as Domestically Glo Marketing.
Develop Marketing Strategy. It is therefore important to give it due importance and allow in depth analyses to become the basic of pricing decisions.
Marketing Mix – Pricing. Pin Share Pocket. Share. 30 Shares. Share your thoughts and experience. Name* E-mail*. Pricing Strategy One of the four major elements of the marketing mix is price. Pricing is an important strategic issue because it is related to product positioning.
Geographic pricing strategy is used to price product as per its geographical location. As the distance increases from the point of production, the cost of the product increases.
The main points to be considered under this are as follows −.Download