Pricing Objectives
Without a proper pricing strategy, no business can expect to survive in the competitive market of today. And what leads to that strategy? Well! That's no other than the accurate identification of pricing objectives. Identifying the purposes of setting up the pricing is the first step towards a robust pricing strategy
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Although survival is not the only goal, the businesspeople have in their minds about their businesses, but also to prosper by generating a lot of income from it. Therefore, pricing objectives may vary significantly from business to business depending upon the current situations that the brand is facing, the mindset of the management team, rise, and downfall in supply and demand, etc. Pricing up the product
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As its name suggests, ROI is the amount of return (either as a fixed percentage of sales or profit)generated by a particular degree of investment.
A high return due to high pricing of the product with the low cost of production and promotion is what all the investors strive for. But again, they also need to care for their customer base.
3. Increasing the sales
In these sales-oriented pricing objectives, knowledge gained from experience curve is put to some good use in predicting a strategy that's capable of decreasing long-term costs while ensuring a long-run profit, by increasing the number of units sold. For this purpose, companies may alter the prices or even whole pricing policies to improve their chances of getting a greater number of sales.
Furthermore, brands can use the objective for the purpose of increasing the market shares also, which is a measure of the sales comparison with another brand's or in the whole industry. Aside from achieving a definite target of market share, companies can also use pricing to boost up their shares. Since, greater the price (to an appropriate level), greater are the chances to a larger proportion.
4. When survival is the only
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But that's why we do planning, hoping for the best and getting ready for the worst. In times of overcapacity or market decline, strategists can decrease prices to an extent which could still cover up the costs and let the business up and running. That's the case where survival gets higher priority as compared to profits and sales.
5. Making your product a trendsetter
Quality is what determines how much a product should cost. When a product is new in the market, people are very much interested in it. But when it gets a thorough mixture of high quality and affordable price, it is referred as to be the trendsetter in the market.
The primary goal of the companies, setting such pricing objectives, is making a product visible in the market by price, especially if it's a new one. Companies set their prices low so as to attract people, and if guys like it, it works as a trigger to a repetitive chain reaction of purchases that people
Nevertheless, it must “defend” its current market share if not increase it, by maintaining premium quality and develop innovative products. The marketing mix strategies will effectively achieve targeted revenue and profitability in the near future.
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
Pricing Strategy: We are going to take into consideration inflation, benchmarking and customer trade off. The pricing strategy for the new products/line extensions will be a penetration-pricing strategy to gain customers from other competitors and increase market share. Further, the volume discounts are going to be in the range of 25-40%. Taking into consideration Product lifecycle, those will be raised in the time where new products/line extension are launched.
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 internal factors are inclusive of the marketing mix of the organization and the organizational goals. The product itself is a huge influencer of the price. If the product offers a huge number of features, then the price is likely to be high. If a sports event offers a large amount of entertainment to the public then the price is likely to be high. The promotion part is very much linked to price as the seller usually promotes its product on the basis of pricing. Several products advertising campaigns are based on the price discounts being offered, for example selling the sports merchandise at half price will be advertised a lot in the shops.
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.
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.
Brand loyalty when brand loyalty is strong within an industry, it can be difficult and expensive to enter the market with a new product.
In general the customer bargaining power is low and therefore it raises the potential of market's profitability. Though, most of the companies provide "buy-backs" and price protection that lessens the chance to cash on moderately strong manufacturers position.
The price strategy to be discussed below takes into consideration all the principles and factors that inform and affect the sphere of pricing of a product in a given market setting. The same will take into consideration the question of available competition and the effect of that competition on the pricing of the goods. Further, it will attempt to analyze the impact of the pricing adopted to market segmentation as well as to the overall target market. Finally, the commentary will interrogate the effect that the pricing strategy will have on the brand image of Coco Berries, and the strategy that will be preferred to canvass the costs and expenses incurred in transportation, storage and inventory of the final goods.
Businesses use a strategy to determine how much the consumer is willing to pay for a product. To accomplish this businesses offer multiple products that may seem in many ways different but are more or less the same basic product. This pricing strategy shows that consumers set the prices of goods by choosing which products they buy.
...trospective revenue of the company, rendering a price floor incapable of increasing revenue, which is the goal from the beginning.
Price is the values entirety that consumers trade for the advantages of having or utilizing the product or services. Different places and cultural have different spending culture. Therefore the price has to be relevant according to the product offer because it can reflect the image of a
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
...e enough because the company has chosen the best possible way to increase the company performance. The pricing strategy is the company’s best strategy from all because it affected the sales revenue a lot. Although fluctuating the price is quite risky for a business since the customers might order from other companies if the company doesn’t do it properly, but XXX Company manage to done it well so far. The effectiveness might also be seen by the average of sales revenue between January to August from 2011 to 2013.