The Marketing Mix: Price

Table of Contents

ASSESSING OVERALL COSTS1

PRICING STRATEGY1

TEMPORARY SALES PROMOTIONS2

PRICE DISCRIMINATION2

CALCULATION FOR PROFITS3

REFLECTION3

Improvements to my thinking3

Improvements by the Feedback4

The Marketing Mix: Price

ASSESSING OVERALL COSTS

Following are the costs that would be considered while calculating for profits and setting the price.

Labor costs (wages, benefits, health insurance, facilities and others)

Rent/ Mortgages

Marketing/ promotion

Employee Training

Material/Supply costs

Telecom/utilities/Insurance

PRICING STRATEGY

There are several pricing strategies. Fine Look would follow a value based pricing strategy rather than a cost plus pricing strategy or a ROI pricing strategy, as used by many new business startups. This is crucial because only when a business is following a value based pricing strategy; it ensures that it earns the maximum possible revenue. More importantly, the fact is that customers are least bothered about the costs incurred by the business or the prices charged by the competitors, but they remain interested in paying for the perceived value that they receive from the service (Pride & Ferrell, 2011). Companies like BMW, Rolex, Rolls Royce, Gucci and others are able to charge such outrageously high prices not because they focus remains on covering their costs, but their prices represent the perceived value that these brands deliver to their customers (Smith, 2011). Nevertheless, in order to be able to follow a value based pricing mode, Fine Look would first have to undertake comprehensive market research to quantify “perceived value”.

TEMPORARY SALES PROMOTIONS

Sales promotions always appear an attractive idea for boosting sales revenue as well as a promotional tool. However, most businesses avoid the fact that they hamper the profitability of the business and at the same time, restrict the ability of the business to increase the price at the pre-promotion level since customers are more likely to set their price expectations at a much lower level (Schindler, 2011). Furthermore, an upscale and premium priced establishment like Fine Look ...