Make Marketing Mix Decisions Once the segments and positioning is somewhat in place, the marketing mix planning comes into effect.
Estimate the demand curve - understand how quantity demanded varies with price. Usually, price fixing involves setting high prices so consumers must pay a high price regardless of where they purchase a good or service. Calculate Costs If the firm has decided to launch the product, there likely is at least a basic understanding of the costs involved, otherwise, there might be no profit to be made.
A satellite channel provider may offer an introductory price and then increase as business grows. Demand is expected to be highly elastic; that is, customers are price sensitive and the quantity demanded will increase significantly as price declines. Pricing is of vital importance because of the following reasons.
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.
Their conversation went like this: This process is known as a forward auction.
Psychological Pricing Often a company will make small changes to prices to make a customer think the item is priced lower than it is. The grey area here is whether the company should follow this practice in all instances. In either case, the effort will not succeed unless the price change is combined with a total marketing strategy that supports it.
When products go on sale, companies mark down the prices, but they usually still make a profit. Penetration Pricing A low price is set by the company to build up sales and market share.
For example, misleading promotional campaigns or the use of harmful or low quality materials can lead to incorrect buying decisions. Sharp, LG, and Chungwa collaborated and fixed the prices of the LCDs used in computers, cell phones, and other electronics.
Pricing plays a very important role in determining a products perceived value, in building brands and in ensuring long term profits and sales for the company. Pricing at a Premium With premium pricingbusinesses set costs higher than their competitors.
Keeping in mind revenue and costs, a company may want to maximize profits. In other words, the price of a finished product is intimately linked up with the price of the raw materials. Setting the price too high may attract a large number of competitors who want to share in the profits. Competition Pricing When trying to go head to head with competitors offering similar benefits, a company may decide to: There is often a tendency for marketers to focus more on activities like promotion, product developmentand market research while prioritizing their responsibilities.
People are more likely to buy them when their prices drop and less likely to buy them when their prices rise. These steps are no necessarily all followed in this sequence. Three important factors are whether the buyers perceive the product offers value, how many buyers there are, and how sensitive they are to changes in price.
Going-rate pricing is often used on commodity products such as wheat, gold, or silver. Estimate Demand Curve Another market analysis needs to be conducted at this point.
Though it is important to plan for pricing changes and their impact on the brand and product perception, this can still be accomplished much faster than any other changes.
This will allow the company to introduce the product step by step to different layers of the market. In addition to setting the price level, managers have the opportunity to design innovative pricing models that better meet the needs of both the firm and its customers. "Price decision and management of the price variable is a crucial task, that confronts a marketer.
In order to take correct decisions, it is important that he understands the concept and its influence on pricing decisions (Saxena, ).".
The pricing decision is a critical one for most marketers, yet the amount of attention given to this key area is often much less than is given to other marketing decisions. One reason for the lack of attention is that many believe price setting is a mechanical process requiring the marketer to utilize financial tools, such as spreadsheets, to.
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*. The concept provides an overview of Pricing - one of the most important marketing mix decisions.
It offers a full description of the six steps which can be used as guidelines for implementing pricing decisions, and also offers well-documented examples. Hot Topic; Blog; About Us; "Price decision and management of the price variable is a.
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 −.
A marketing strategy has many components but the ones which affect the pricing decision are the core strategy, value proposition, brand positioning and customer targets. These components do not dictate the actual price but instead determine whether the price is high or low.Pricing decision the marketing strategy