Pricing and Distribution Strategy Memorandum With any pricing strategy, the price must match the branding of the product. For example, for a luxury item branded product, the price needs to be higher to coincide with the branding perception. A few pricing strategies to focus on include product cost based strategy, customer-focused strategy, and product life-cycle strategy. The distribution strategy also plays a crucial role in the successful implementation of a new product. Furthermore, MM Inc. needs to determine what distribution channels will have the greatest influential means to market and sell the new product.
Pricing
Before Mobile Marketing determines which pricing strategy to choose, the organization should consider the overall objectives. Which pricing strategy will fit best with the objectives of the new product development? Is the purpose to make the most amount of profit the fastest way possible, or to develop a long lasting relationship with the target market to establish long-term profitability and growth? Determining the key objective will help to discover which pricing strategy works best, however, the company has to make a profit to continue business. According to M.U.S.E. (2013), pricing involves the customer demand schedule, the cost function, and the competitors’ pricing. All three factors need to be addressed during the discussions of the following pricing strategies. The first pricing strategy is the product cost-based strategy. The
Objectives 3.1 Describe the relationship between differentiation and position of products or services. 3.2 Analyze the impact of the product life cycle on marketing. 3.3 Identify the appropriate price strategy that should be used in the development of the strategic marketing plan.
Pricing can play an important role in the success or disaster of any product. Too high a price and the product will fail; too low a price and not enough profits will be made to sustain business operations (Hisrich, Peters, & Shepherd, 2014). The key is to make the customer think that they are paying exactly the right price for the product. Anything else though in this regard means the product is not positioned well in the mind of the consumer. First of all, Gril-Kleen will have to decide on what sort of strategy it needs to pursue. This strategy is decided on three factors namely costs, margins and competition.
We think that companies should calculate their break-even point for their goods and services and to charge the prices according to that figure. This way, they can make sure that their price covers their expenses. In case of AT&T’s text messaging they are charging much more than the cost. But because there are only four national carriers in United States and they control 90 percent of the market, and text messaging had become widely popular, they can afford high prices. They are considering the demand of the service and pricing the product according to demand and supply.
Pricing is one of the most important elements of the marketing mix for the MARC. It is the only one of the components that generates revenue, while promotion, place, and product generate cost. Producing, designing, distributing, and promoting products come with expenses.
Because CVS must consider several factors affecting its business, such as: suppliers, consumer demands, competitors and their existing products, pricing strategies are complex. Options for pricing strategies may include: membership or trade pricing, geographical pricing, penetration pricing, product bundle pricing, discounts, and closeouts. Options for non-pricing strategies include:
Pricing is important when marketing a product. The determining factor for the pricing is the material, time to make, amount spent on marketing and promotion of the product. The goal in providing such a product that is moderately
Of the four P’s in the marketing mix, the pricing strategy is arguably of primary importance. In fact, price is the only element in the marketing mix that generates revenue and drives profitability. The revenue generated by price is also essential to cover the cost of the other three P’s, namely, product, place, and promotion. Therefore, none of the other strategies in the marketing mix would be possible if a company’s pricing strategy does not generate revenue (Hill, 2013). Recognizing the critical importance of an optimal pricing strategy, Cabela’s implemented a SKU level profitability and price optimization system supplied by Revionics Inc. in 2013 (“2013 Annual Report”, 2014).
4. Evaluate key pricing considerations and strategies relative to the product life cycle of your client’s
CVS needs to think through numerous elements impacting its’ business. Pricing strategies, rivals and their current products, consumer demands and suppliers are examples of these elements. For pricing strategies, CVS should consider closeouts, discounts, product bundle pricing, penetration pricing, geographical pricing, and membership or trade pricing. For non-pricing strategies, options comprise: enhanced service quality, longer opening hours, advertising, and extended warranties (Kimmons, n.d.). By pricing similar products in a different way they must focus on regional demographics because geographic pricing enables the maximization of profit. For promoting unique or new products at provisional price drops, penetration pricing is the most effective. Finally, bundle pricing and closeouts can be engaged when several
Prices reflect the unique value of the brand to a certain extent. Brand positioning builds the unique brand image in the minds of consumers, so price setting and adjustments must adapt brand positioning, and brand positioning shows the brand’s unique value through price (Kotler, 2013, p. 215). For Qantas, the pricing strategy utilises a cost plus margin method of product pricing, offering lower pricing in accordance to the market demand. The number of travellers requiring Qantas services, prompt the airline to adjust pricing rates accordingly.
Course Modules help instructors select and sequence material for use as part of a course. Each module represents the thinking of subject matter experts about the best materials to assign and how to organize them to facilitate learning. Each module recommends four to six items. Whenever possible at least one alternative item for each main recommendation is included, as well as suggested supplemental readings that may provide a broader conceptual context. Cases form the core of many modules but we also include readings from Harvard Business Review, background notes, and other course materials. I. Overview of suggested content (HBS cases unless otherwise noted) Title 1. Module Overview
There are also some risks for each strategy. Upholding cost leadership can be risky because of the requirement of frequent capital investment to sustain cost advantage, then cost surges narrow price differentials and diminish ability to compete with other’s brand royalty. Differentiation strategy has some threats, such as imitation decreases alleged differentiation, buyers need for differentiation falls. Meanwhile, the risks for focus or niche strategy are the differences in preferred products or services between the strategic market and target as a whole narrows, the cost discrepancy between wide ranged competitors and the focused firms broadens to eradicate the cost advantages of allocating a narrow target or to offset the
Now looking at the three marketplaces that we have chosen to explore for our product, we conclude that in terms of consumer behavior, buying habits, values and concerns, these three marketplaces are totally different from each other. It is very evident that each region requires a separate pricing strategy and so that is what we are going to follow in this global plan of our company.
Price interacts with all other elements of the marketing mix to determine the effectiveness of each and of the whole. The objectives that guide pricing strategy should be a subset of the objectives that guide overall marketing strategy. Thus, it is probably wrong to view price as an independent element of marketing strategy or to assert that price, by itself, is a central element in the marketing mix.” (Webster, 1979)
Price, which is one of the most important elements of the marketing mix, can be difficult to get right. Pricing too high, or low, can negatively impact on customer satisfaction and revenue. Adopting a pricing strategy is necessary to achieve desired sales objectives (Chan & Wong 2005).