How the Pricing Strategy of a Product Can Affect Revenue

The company must factor in that each of their customers has lifetime value, a greater value than a small gain made on first sales. With competition in their sector, more penetration pricing would be appropriate. The penetrating pricing strategy would only make sense to retain customers; the pricing strategy must realize lifetime value, (University of Phoenix, 2011).

This is a strategy that can apply to products with consumable supplies. This is where the pricing at high prestige levels, otherwise they will not sell; customers equate higher quality with higher prices.

In order to acquire the market share in any segment, the company uses penetration pricing strategy aimed at increasing the number of consumers in an area. Apart from increasing the sales of the company, this strategy helps in increasing demand for the produce hence a positive result in productivity. In addition, the company uses promotional pricing strategy aimed at increasing the market share at the expense of the competitors (Ferrell & Hartline, 2011).

Companies can choose many ways to set prices, skimming price strategy where a company sets a higher price than normal and a penetrating price where low initial price is set. “Pricing

When a company is looking at pricing strategy there are the “five Cs of pricing” that a company will examine. The five Cs are, competition, costs, company objectives, customers, and channel member (Grewal & Levy, 2014). Only company objectives, competition, and cost will be reviewed. Company objectives, Target’s slogan of “Expect more. Pay less.” says a lot. It is letting the consumer know that it offers quality products at lower prices. Target is using the competitor

Pricing is the most important aspect of the marketing mix. Price is the only element of the marketing mix, which produces a turnover for the organization. Pricing plays a crucial role in the product consumption. Pricing products too high or low results in loss of sales for the company. The pricing of each organization based on its corporative objective.

This strategy guarantees that the company does not loose out on the venture by covering their fundamental costs of operation. This allows them to keep the price low enough to entice consumers while simultaneously hedging themselves from the risk of losing money on each item sold. This is basis for a market penetration strategy.

As per Ian Ruskin Brown and Greg Clark “ Marketing mix is the term used explaining the different elements comprising the offer that the different companies makes to their customers”. (Brown and Clarke, 2000:44). E.Jerome McCarthy in early 1960s came up with the four Ps in the marketing mix. According to him these 4ps are “ Product, price, place and promotion”.( McCarthy and Shapiro 1975: 35). Refer Appendix I for the pictorial representation. But the view of Richard Sandhusen is that the four marketing mixes should be ‘price, product, promotion and distribution’ (Sadhusen, 2000:319). According to Steven Stralser ‘in order to create a marketing strategy and plan that touch all the areas of marketing to position a product, maximise revenue etc a few more components have to be considered which are, Marketing segmentation, Marketing Strategy, Marketing research , Pricing, placement and value chain.’(Stralser,

The marketing mix is a combination of 4 P’s (product, price, place and promotion) that should be used in conjunction with each other to ensure a competitive edge over other companies. ‘The marketing mix is designed to produce mutually satisfying exchanges with a target market’.

penetration pricing strategy. All indications are that sales will continue to grow. In response to a

pricing closely, as being out of step with the market can cause dramatic market share changes in a

As is known, pricing is one of the most important steps for business plan which needs good research, calculations and formulations. There are different pricing strategies to put into effect due to the market and product conditions, such as premium pricing, penetration pricing, economy pricing, price skimming(Voice Marketing, 2012). These four pricing strategies are main pricing policies. They form the bases for the exercise. However there are other important approaches to pricing. These pricing strategies are: Psychological pricing, product line

Based on these 6 factors in setting a price: selecting the pricing objective, determining demand, estimating costs, analyzing competitors costs, prices and offers, selecting a pricing method and selecting the final price, Singapore GP Pte Ltd employed 2 different pricing strategies. They are

A good pricing strategy can help you determine the price point that maximizes your profit when you sell your product or service. Although the customer does not buy goods that are too expensive, if the store's commodity price is too low to bear all the commercial costs, then it will bring a loss.

This essay will examine the role and importance of various pricing strategies in regards to marketing in the hospitality and tourism industry.