Pricing and Distribution

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).

Designing an appropriate pricing strategy is always a challenging task for most corporations, because price is a determinative factor of operating profits. Meanwhile, price can affect customer perceptions and product development. According to the basic economic theory, pricing policy should reflect the product’s costs and the relationship between supply and demand. In addition to the fundamental framework, price settle mechanism should take into consideration the underlying industry environment. For example, pricing in manufacturing is heavily cost-based with the certainty that the costs are fully covered. And conversely, in some particular sectors, there are downsides when price setting relies solely on the variable costs because of the high fixed cost. Based on this judgment, product providers should carry different pricing mechanism under different market conditions. Accordingly, pricing evolves from a purely academic topic related to the economic theories to a profits-maximising instrument involved with marketing practices. All these issues make the price setting problem more

Price skimming, also known as market-plus, involves setting a high price when compared to the competition and then eventually lowering this price. It is usually used for new products and services that will attract early-adopters willing to pay a higher price. The business can initially reach these early-adopters to maximise revenue, but this may be limited because students are often price-sensitive due to their low income. However, the higher price enables companies to test students’ willingness to pay a high price, and then lower the price to appeal to those who are more price-sensitive. Although, this may aggravate early adopters, a lasting high price may defer mass market acceptance. The initial high profit margin may lead companies into avoiding cutting production costs which is necessary for when the selling price lowers. However, price skimming allows the company to quickly recover product

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.

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

The Marketing Mix is the name given to the elements which are the key components which a marketing plan should be based upon. Typically in Marketing literature there are four elements: price, place, promotion and product, however this is now sometimes expanded to incorporate another 3 elements: people, physical evidence and process. Pricing policy is clearly very important to the marketing mix and is affected by variables such as firm’s objectives, the nature of competition, demand and firm costs. Firms operate pricing in different ways according to their marketing strategy and the industry in which they participate; an example of pricing methods will be shown and evaluated further in the

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.

| Within the framework of a break-even analysis, an examination of is conducted to determine the quantity at which the product, with an assumed price, will generate enough revenue to start earning a profit.Answer

As an extremely important decision for a company, pricing is the only element of the marketing mix that generates revenue. The positioning of a product in the market is dependent on its pricing since customers tend to greatly resist attempts to change price once it has been set up. As compared to other elements in the marketing mix, price is the variable with which a competitive response can be quickly implemented. On the contrary, distribution basically involves the process of getting the product from the manufacturer to the intended consumer.

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

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

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

Promotional strategy can be described as the function of notifying, persuading, and influencing the decisions of a customer regarding a particular product and/or service. Notably, certain promotional strategies are geared towards creating primary demand or desire for a general product category. The most common objectives of the use of promotional strategies across organizations include creating the primary demand for a product, expanding markets, maintaining the current market position, and presenting a corporate view on a public matter. The other important aspect in the marketing mix is developing an appropriate pricing strategy for the product and/or service. The main objective a suitable pricing strategy is to ensure that the product and/or service are provided at reasonable prices while the

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).