1. How does product line pricing maximize profits for an entire product line? If the price for different products is less than the sum of the separate prices, customers will be more likely to purchase without thinking it twice. This is why, product line pricing is a good strategy for companies that have more than two products in the line and have clear differentiation of features and benefits. It is important to build a strong product differentiation so that customers understand what they are paying for, why, and what are the benefits. In addition, exposure of the products can be easily and more efficiently accessed by offering more than one product. The line will acquire more recognition and as already mentioned, exposure. Companies are ore likely able to maximize turnover and profits by using product line pricing when there re ample price gaps between category. This will enforce product and quality differentiation …show more content…
Does it make sense for BoltBus to use product line pricing? Why or why not? According to BD Dictionary, line pricing is a product pricing strategy to be used when you have more than one product in a line (n.d.). It makes sense for BoltBus to utilize this strategy because their services are different and by setting different prices, they communicate to their customers what their options are. This allows them too to differentiate their services from other companies like Megabus. They are able to set competition not only among the industry but the services they provide as well.
2. What is BoltBus’s primary strategy for setting prices? According to BoltBus official website, they set the prices by analyzing the demand on any given day of the week (n.d.). They take historical data to see how many people has ridden their buses on a certain route on any given day or time period. They advise that purchasing a week or two in advance will generally result in a cheaper fare.
3. Do you believe another pricing strategy would be better for BoltBus? Why or why
Setting prices too high would discourage purchasing and setting prices too low negatively affects revenue. While several pricing strategies exist, the use of a value-based pricing system, as implemented at Cabela’s, offers an optimal strategy that meet both customer expectations and company requirements.
Thus new products/line extensions will be based on Allround brand, each one with a unique target market, delivering different value proposition to the respective customer.
A couple of Squares has a limited capacity for which to produce their products and smaller companies tend to have larger fixed costs than bigger companies. Therefore, A Couple of Squares must maximize profits in order to ensure that they will stay in business. A profit-oriented pricing objective is also useful because of A Couple of Squares’ increased sales goals. A Couple of Squares increased their sales goals due to recent financial troubles. Maximizing profits is the easiest way to meet these sales goals due to the fact that A Couple of Squares has limited production capacity. The last key consideration favors a profit-oriented pricing objective because A Couple of Squares offers a specialty product. A specialty product often has limited competition, therefore can be priced on customer value. Pricing at customer value will maximize profits as well as customer satisfaction. A Couple of Squares’ lack of production capacity, increased sales goals, and specialty product favor a profit-oriented pricing
An innovative product can increase product differentiation and value (V); can strengthen buyer demands – boosting sales. Another strategy is Chipotles ability to offer organic ingredients at an appealing price point.
As we learned from Chapter 12, price must be carefully determined and match with firm’s product, distribution, and communication strategies. (Hutt & Speh, 2012, p. 300) Therefore, there should be a strong market perspective in pricing. In order to build an effective pricing policy, marketers should focus on the value a customer places on a product or service. One of the most effective ways to do so is differentiating through value creation.
The fewer number of products a company has to assess, the easier it is and more cost efficient to determine the performance of a product. It’s important to identify in the early stages and as soon as possible which products are attractive to the market and performing as well or more proficient than expected in the target market. Timing strategic moves is an important part of dealing with competition; especially when competitors have a larger product selection and have a significant bigger number of products or markets to focus on. By releasing new lines and focusing on 2 to 4 patterns each season, the company is driving innovation; another way the company is driving innovation that could give them an advantage over the competitors is by giving each product a specific life-cycle that way the company (Vera Bradley), is not losing its clientele that are seeking that new product each season.
Due to the various options of distribution channels their prices vary. Consumers take that into consideration when purchasing their products.
For example, Henry Ford had developed the automobiles that was affordable to the middle class by using the assembly line. Even though he did not invent the automobile or assembly line, he was the one create the affordable cars to the America middle class by manufacturing the exact same cars. By manufacturing the same product, he was able to lower the price for each unit and lower the unit product cost of automobile as well. Hence, price is an essential factor that drives the consumers’ purchasing decision. Therefore, standardized product is an effective way to attract more consumers because the price is
The pricing strategy will start out rather high for this product upon its release in order to draw a more selective crowd such as the upper class members of the urban society. Once the product has succeeded within this market there will be a development of additional variations of the product which will allow for certain models, with less features, to be sold at a lower price point in order to attract the members of society who are less willing to pay the high asking price for the top of the line version of the
Other: Sometimes just by watching advertisements don’t attract the costumer. Until and unless they don’t taste it they would not trust the product, and buying a product of 3 dollars sometime feels risky. For this the most amazing solution for customers and for the company is to give this product with the other product of the same company in free, or in 10% discount. It will feel like a loss but if we see in the long run process it is kind of a profit only. To buy this product and taste it people will buy the existing product of the company. As the product becomes popular in our target market we can stop this process and start selling it in a normal
More competition in lower trade as other firms will try to convince that their product is better than K2-products.
The pricing strategy for a new product should be developed so that the desired impact on the market is achieved while the emergence of competition is discouraged. Two basic strategies that may be used in pricing a new product are skimming pricing and penetration pricing.
A key aspect of profitability is choosing the correct pricing strategy for their product. By understanding factors like competition, cost and market price sensitivity a company can effectively choose a pricing strategy to fit their product (Hinterhuber & Liozu, 2012). Hasbro can also lean on their years of experience successfully launching toys into the market. This experience will help them, as pricing products can be a bit of an art to go along with the math and developing this intangible can be necessary when pricing a product. Of the three high level pricing strategies: cost-based pricing, competition-based pricing and customer-value based pricing, Hasbro will use a cost-based pricing strategy to set a price that ensures they are turning a profit or at least breaking-even.
Therefore, leader pricing would be the first strategy in order to introduce the product into the market. This strategy entails the deliberate setting of low prices so that the product acquires its place with regard to market share. Once the same is achieved, the price is increased gradually so as to attain a profitable position in the market. This strategy is exclusively used in introducing the product into the market and acquiring market presence and position in the long
...n the companies will have to decrease the price otherwise the product will not be sold at higher prices and the revenue would not be as large as companies would like to.