Pricing Strategy Essay

2689 words - 11 pages

Pricing strategies
Without a doubt, finding the right pricing strategy is an important element in running a
successful business.
Pricing is essential but complicated for marketer. An organisation can fail if there is any
mistake in pricing strategy even if all other aspects of marketing strategy are achieved.
Price is not just a number on a tag. It comes in many forms and performs many
functions. Rent, tuition, fares, fees, rates, tolls, retainers, wages, and commissions are all the
price you pay for some good or service.
Despite the increased role of nonprice factors in modern marketing, price remains a
critical element of marketing. Price is the only element that produces revenue; the others
produce costs. According to Kotler, price is 'the amount of money charged for a product or
A business can use a variety of pricing strategies when selling a product or service. The
price can be set to maximize profitability for each unit sold or from the market overall. It can
be used to defend an existing market from new entrants, to increase market share within a
market or to enter a new market. Businesses may benefit from lowering or raising prices,
depending on the needs and behaviors of customers and clients in the particular market.
Unlike advertising, which overtly disseminates a message, pricing provides a subtler
cue about your company, attracting a particular demographic or making a statement about
your product's value.
How should a company set prices for products or services? How should a company
adapt prices to meet varying circumstances and opportunities? When should a company
initiate a price change? How should a company respond to a competitor's price change? This
essay aims to answer all these questions.

Setting the price
Companies do their pricing in a variety of ways. In small companies, the boss often sets
prices. In large companies, division and product line managers do. Where pricing is a key
factor (aerospace, railroads, oil companies), companies often establish a pricing department to
set or assist others in setting appropriate prices. This department reports to the marketing
department, finance department, or top management. Others who influence pricing include
sales managers, production managers, finance managers, and accountants. Executives
complain that pricing is a big headache-and getting worse by the day.Many companies do
not handle pricing well and fall back on "strategies" such as: "We determine our costs and
take our industry's traditional margins."
For any organization, effectively designing and implementing pricing strategies
requires a thorough understanding of consumer pricing psychology and a systematic approach
to setting, adapting, and changing prices.
In setting a product's price, marketers follow a six-step procedure: selecting the pricing
objective, determining demand, estimating costs, analyzing competitors' costs, prices, and
offers , selecting a pricing method and selecting the final...

Find Another Essay On pricing strategy

Superior Supermarket: Everyday low pricing Strategy

4674 words - 19 pages Untitled Problem Statement Superior Supermarkets must decide whether or not to pursue an everyday low pricing strategy in its three stores servicing grocery shoppers in the Centralia MO area. Underlying Issues and Facts Superior Supermarkets (SS) is a division of Hall Consolidated, a privately owned wholesale and retail food distributor. Hall distributes food and related products to some 150 company-owned

Pricing strategy of low cost airlines

5130 words - 21 pages requires a complex revenue management system to manage inventory and pricing, and a team of well practised revenue managers to control the system. In contrast easyJet's system is easy to understand by customers, easy to manage and does not require a large team of revenue managers. During the summer of 2001 Go switched their pricing strategy to mirror easyJet's. So by the autumn data collection all three airlines had a one way ticketing policy.4.2

Product Life Cycle and New Product Pricing and Mix Product Pricing Strategy

1676 words - 7 pages Orange is very huge which aiming to establish branding and quality of product in this stage. It's unlikely to have profit at this stage, it's only a stage to testing the market.Companies may choose market skimming as the pricing strategy of the product in order to recover the huge development cost. Or they may choose market penetration in order to build up market share. At the very beginning stage of introduction of 3G mobiles, Orange wanted to

How the Pricing Strategy of a Product Can Affect Revenue

1344 words - 6 pages Topic: Pricing Strategy Introduction All goods and services offer some utility or power to satisfy wants. This utility is the individual preference associated with each goods. The sum of all the values that consumers exchange for the benefits of using the product or service is called the price of that product. It can mean “rent, tuition fee, fare, rate, interest, toll, premium, honorarium, dues, assessment, retainer, salary, commission, wage

Mountain Dew: Reasons for failure in Pakistan, Marketing analysis, Strategies, USP, Pricing strategy, competitive analysis, market segmentation, target market, etc

8497 words - 34 pages 55 Coca Cola 57 7 UP 60 Competitive Strategy OF Mountain Dew 63 Market Segmentation 65 Positioning through Life Cycle 68 Content Page No Marketing Strategy for Mountain Dew 75 Product Lines & Branding 78 Price Quality Strategy 85 Pricing Method 87 Distribution Channel 89 Developing & Managing Advertising 92 Advertising Message 95 Media & Measuring Effectiveness 97 Sales

Will Kodak's Razor and Blade Pricing Strategy Succeed?

1066 words - 4 pages I believe Kodak's strategy will succeed. Why shouldn't the company that started the photo business a century ago enter the printer business, particularly with an eye on getting more of us to print our digital photos? The Kodak brand has always ranked among the top in the world by name recognition and quality. Eastman Kodak has built its brand loyalty since 1888 when George Eastman produced the first camera that simplified the complex process of

What´s Odd-End Pricing?

945 words - 4 pages Odd- end pricing is another pricing strategy that is used by many retailers. Odd-end pricing is the “ubiquitous practice of expressing a price so that it falls just below a round number” (Harris and Bray). In other words it is the technique of pricing items with an ending of nine versus using a solid, round number. Consumers are “alleged susceptibility to “price illusion” (Huston and Kamdar, 1996). This price illusion is what many experts

The New Price Discrimination

960 words - 4 pages flight to Anaheim, but their neighbors fly out the following week and pay just $800 for the same tickets with the same layover and the same airports used. This form of pricing strategy is known as variable pricing and it is a category of price discrimination. It is commonly used to raise or lower prices on what appears to be the whim of the seller or business. Price discrimination and variable pricing sound like two sides of the same coin because

Penetration Pricing

2479 words - 10 pages Penetration pricing is a pricing strategy whereby an organisation introduces its goods or services to consumers at a comparatively lower price than the existing market price. The fundamental objective of such an approach is attracting consumers to the product in the hope that the consumer will establish a fondness or a need for the product. As a consequence, organisations use this strategy as a means to ultimately gain a higher market share for

Pricing in the service industry

847 words - 3 pages sales (demand) and price data for simulation purposes, especially for a service innovation or a newly offered service. Besides, stabilizing market price is one of the major tasks of marketing managers. A frequently fluctuating pricing strategy may damage the company's image. For future model modification, instead of depicting the relationship between price and the entire firm's demand, it is more practical to focus on individual client's price

Marketing Plan Phase III

1737 words - 7 pages selected pricing strategy. Pricing strategy is nothing more than taking into account research, production, and how setting the price will affect the market, customer, and return on investment. Taking into consideration positioning and recommended target segmentation markets, pricing objectives will focus on Quality Leadership, with a cost-plus pricing method. Speak Easy Speak Smart will be sold as a high quality product worth paying a high, not

Similar Essays

Futures Pricing And Hedge Strategy Essay

3266 words - 14 pages When considering forward and futures contracts, it is important to distinguish between investment assets and consumption asset for the purpose of the investors. The consumption assets are assets held primarily for consumption purpose, therefore, the no-arbitrage theory cannot be used in pricing the futures and it is impossible to determine the futures price as a function of the spot price and other observable variables. This article uses futures

Pricing And Retail Strategy Of Intuit

918 words - 4 pages Pricing and Retail Strategy of Intuit An organization’s pricing strategy will vary depending on multiple factors. An organization needs to understand their competition and market share, the distribution chain, and ultimate goal of customer retention. This paper will review the pricing strategies of Intuit. Intuit Intuit is a multinational corporation that provides products and services for both business and personal financial solutions. The

Promotional, Pricing And Distribution Strategy For Ipt

578 words - 2 pages send a link to the site informing other parties about the company. IPT will also utilize direct mail and email to targeted consumers and businesses. IPTs pricing strategy will take into account the cost to make and deliver the product while gaining a return on their investment. In addition to the cost to make and deliver the product, IPT will remain aggressively priced with their competitors. IPT will take into consideration price-sensitive

H&M Pricing And Retail Strategy Essay

1341 words - 5 pages Pricing and Retail Strategy of H&M Hennes & Mauritz (H&M) is a Swedish clothing retail company. The company was founded by Erling Pesson in 1947. The first H&M store was opened in Vaesteras, Sweden in 1947. The mission of H&M is to offer fashion and quality at the best price where “quality includes ensuring that products are manufactured in a way that is environmentally and socially sustainable” (H&M, vision & policy, n.d., para. 1). This essay