PDF | Pricing strategy is the policy a firm adopts to determine what it will charge for its products and services. Strategic approaches fall broadly. PRICING STRATEGY. Introduction to Chapter. Price is a significant element in the marketing mix. 'Marketing mix' is referred to as the controllable marketing. BREAK EVEN ANALYSIS. - Is a comparison of alternative cost and revenue estimates in order to determine acceptability of each price. - Break even point is the.
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Pricing Strategy. Learning Objectives. 1) Identify pricing strategies that are appropriate for new and existing products. 2) Understand the stages of the product life. Markup pricing * has resellers adding a dollar amount (markup) to their cost to arrive at a price. It is used primarily by wholesalers and retailers. In cost-plus. Pricing Strategies. Pricing has traditionally been considered a me-too variable in marketing strategy. The stable economic conditions that prevailed during the.
Hence the price needs to be perfect and appropriate. Value Pricing a Product Let me first be clear about what value pricing means, value pricing is reducing the price of a product due to external factors that can affect the sales of the product for example competition and recession; value pricing does not mean that the company has added something or increased the value of a product. When the company is afraid of factors such as competition or recession affecting their sales and profits the company considers value pricing.
For example McDonalds the famous food chain has started value meals for their consumer since they have started facing competition with other fast food chains.
They offer a meal or a combination of a few products as a lower price where the consumer feels emotionally content and continues to download their products.
Pricing of Premium Products Well this strategy works just the other way round.
Premium products are priced higher due to their unique branding approach. A high price for premium products is an extensive competitive advantage to the manufacturer as the high price for these products assures them that they are safe in the market due to their relatively high price. Premium pricing can be charged for products and services such as precious jewelry, precious stones, luxurious services, cruses, luxurious hotel rooms, business air travel, etc.
The higher the cost the more will be the value of the product amongst that class of audience. Conclusion Lets us conclude by summarizing. Not only does price skimming help a small business recoup its development costs, but it also creates an illusion of quality and exclusivity when your item is first introduced to the marketplace.
With the economy still limping back to full health, price remains a major concern for American consumers. Psychology pricing refers to techniques that marketers use to encourage customers to respond on emotional levels rather than logical ones.
One explanation for this trend is that consumers tend to put more attention on the first number on a price tag than the last. The goal of psychology pricing is to increase demand by creating an illusion of enhanced value for the consumer. With bundle pricing, small businesses sell multiple products for a lower rate than consumers would face if they downloadd each item individually.
Bundle pricing is more effective for companies that sell complimentary products. Small businesses should keep in mind that the profits they earn on the higher-value items must make up for the losses they take on the lower-value product.
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Which Is Right for Your Business? Pricing at a Premium With premium pricing , businesses set costs higher than their competitors. Pricing for Market Penetration Penetration strategies aim to attract downloaders by offering lower prices on goods and services. Economy Pricing Used by a wide range of businesses including generic food suppliers and discount retailers, economy pricing aims to attract the most price-conscious of consumers.
Small businesses that sell goods with unique properties are better able to use premium pricing. To make premium pricing palatable to consumers, companies try to create an image in which consumers perceive that the products have value and are worth the higher prices. Besides creating the perception of a higher quality product, the company needs to synchronize its marketing efforts, its product packaging and even the decor of the store must support the image that the product is worth its premium price.
Penetration Pricing Strategy Marketers use penetration pricing to gain market share by offering their goods and services at prices lower than those of the competitors. Marketers want to get their products out in the market so that the products raise consumer awareness and induce downloaders to try the products.
Although this lower price strategy may result in losses for the company — at first — but marketers expect that after achieving a stronger market penetration that they will raise prices to a more profitable level. Economy Pricing Strategy An economy pricing strategy sets prices at the bare minimum to make a small profit.
Companies minimize their marketing and promotional costs. The key to a profitable economy pricing program is to sell a high volume of products and services at low prices.