Pricing Strategy and Channel Distribution

Price gouging refers to the practice of raising the price of goods, services, or commodities to an unfair or unreasonable level. Price gouging is often the result of a sudden increase in demand and a shortage of the desired goods often in time of a pending natural disaster or other crisis. Price gouging is seen as an ethical issue as it takes advantage of others misfortunes and bad situations by raising the price for necessary goods and services to unjust levels; to prevent price gouging from occurring thirty-four states have passed laws against it and one faces criminal charges plus civil liabilities if it is discovered that they have engaged in the act . However, some economist and opposers of price gouging laws argue that if consumers are willing and able to pay the set price for a good or service than the business should not be held responsible.

Price fixing is illegal under the competition act of 1998. When participants on the same side of the market (such as the big 4 in the UK supermarket sector) agree to sell a service, product or commodity at a fixed price it’s the consumers who must pay while retailers and suppliers reap the benefits. There are extremely heavy penalties for price fixing in the UK You can be fined, disqualified from being a director - or even sent to prison (Business Link No Date).

Determine and discuss a pricing strategy (penetration or skimming). Determine and discuss pricing tactics (product line pricing, value pricing, differential pricing, or competing against private brands) to be used for your product. Identify any legal and ethical issues related to the pricing tactics. Prepare a marketing distribution channel analysis identifying the wholesaler, distributor, and retailer relationships. Discuss how the distribution strategy fits the product/service, target market, and overall marketing objectives for the company.

This occurs when a business charges the highest price for a product during the introduction stage of its lifecycle. This is typically used when introducing a new, unchallenged product into the market, ensuring high profits before the product has competition. For example, Apple set its price for its iPhone 6 plus exceptionally high due to its advanced features and lack of competitors. This ensured that Apple received high-profit levels before the iPhone 6 plus was challenged by other products. Additionally, this has seen Apple have a high product position and helped cement its brand image, as these higher prices are typically associated with a higher quality product. This has subsequently improved market share and profits.

Price fixing and exclusive dealings are harmful for consumers and small businesses trying to compete with large businesses. The issues with price fixing is that the consumers have to buy an item for a certain price. There is no supply and demand, along with the fact that the prices can fluctuate without any certain pattern. As the prices become higher, the company get

When consumers decide to purchase a product or service a car, a new refrigerator, or prescription drugs, the goal of the antitrust laws is to make sure their choices are not restricted unreasonably. Consumer choice is a powerful incentive for the sellers of any products to keep their prices low and their quality high. When the antitrust laws are vigorously enforced, businesses must respond to what consumers want. A business that ignores consumer wishes, by refusing either to keep prices competitive or to offer

Price Gouging is illegal, however it’s a common practice during a crisis or shortly after it takes place such as a hurricane, floods, or tornadoes. What usually happens is the seller of a good greatly increases the prices of certain items that are in high demand because of the crisis that has taken place. For example, following a hurricane, goods as in wood, paint, bottled

Price discrimination is where a firm changes different consumers different prices for the same service.

there are a number of different buyers and sellers in the marketplace. This means that we have competition in the market, which allows price to change in response to changes in supply and demand. Furthermore, for almost every product there are substitutes, so if one product becomes too expensive, a buyer can choose a cheaper substitute instead. In a market with many buyers and sellers, both the consumer and the supplier have equal ability to influence price.

The second pricing strategy is the penetration pricing where the product enters newly into the market. To gain some consumer base from the competitors, the seller initially charges a lower price than the competitors. For example the ticket prices initially charged for IPL, Indian Premier League, matches were lower than the ticket price of the competition ICL matches. On the contrary, price skimming strategy is to grab the financially top class of the market and to do this, the seller charges high prices. The effectiveness of this strategy is based upon

Today’s highly competitive business world forces companies to create different tactics and relatively rely on multiple pricing strategies to conduct business.

The strategy for setting a product’s price often has to be changed when the product is part of a product mix. In this case, the firm looks for a set of prices that maximizes its profits on the total product mix. Pricing is difficult because the various products have related demand and costs and face different degrees of competition.

Keeping these realities in mind, it is very much obvious that for this market, we choose and follow a value based pricing and do not keep the price of the product too high. It is advisable rather to follow an average pricing and let the consumers build some enthusiasm around the product.

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).