Marketing Product Pricing

Marketing Product Pricing



Marketing Product Pricing

1- Some marketing scholars claim that products and services may go through a life cycle or phase. The release of a brand new product may be labeled as introductory and require the product to be introduced to the market and customers. If the product or service has been enjoying being the only one on the market, one may have noticed that others are also joining in and entering a competitive product or service and this will have an effect of the healthy sales you might be enjoying at the moment. This is known as the growth phase.

In today's world of cutthroat competition among companies, pricing is very important. It is one of the major factors that decide the profitability and overall existence of the company. As one of the four p's pricing strategically is important to the company. As price is affecting both the number of sales an organization makes and how much money it earns, right pricing is one of the key factors of success for a product as well as the company which manufactures the product.

Peter Rix defines pricing as" the value expressed in money terms" (Rix Peter, Marketing a practical approach, 2004, P293). The company earns all its revenue from the price it charges for its products and services. If the price is very high, it will affect the number of units they sell and if the price is too low it will affect the profitability of the company. In a monopolistic market a company can charge whatever it like. Pricing strategy and prices are more sensitive when the competition is high. . The importance of pricing is not applicable if a company has monopoly or there is nil or less competition.

2- The main objectives for price strategy planning can be divide between profit-oriented objectives, sales-oriented objectives and status quo pricing objectives. In profit-oriented objectives, the focuses are on getting a specific return from selling a specific number of units or profit maximization. In sales-oriented price objectives the main focuses are on the growth of sales of a product or to grab a desirable market share. In status quo pricing objectives focuses on maintaining the current stage in sales as well as market share.

According to Zikmunt and d'Amico, pricing strategies may be categorized under five headings.

1.         Differential pricing strategies

2.         Competitive pricing strategies

3.         Product-line pricing strategies

4.         Psychological and image pricing strategies

5.         Distribution-based pricing strategies. (Zikmunt and d'Amico, The power of Effective Marketing, 2002,p 488)

3- Differential pricing strategies

These strategies are based on selling same items to different customers for different prices and doing this managers are aiming to increase profits as well as market share.

Differential pricing strategies includes variable pricing that enables the customer to negotiate the price, which is acceptable for them. In this different customers may pay different price. Another pricing strategy comes under this one is second-market discounting. In this a company will sell a product at one price in its primary or core market and sell the same in ...