Strategic Pricing Decisions Within Companies

Pricing Objectives involve specifying the role of price in an organization’s marketing and strategic plans. These

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

To determine the profit maximization quantity, marginal cost equals marginal revenue (MR=MC) will be used. The main office sets minimum pricing for the franchisee to base their prices off. In the short run, the company can maximize profit at which MR=MC. In the long run the franchisee will have to look at price equaling the average total cost (P=ATC) because the price will exceed ATC resulting in an economic profit. The downfall is the profit will entice new companies to enter into the industry, such as Starbucks. Total profits increase when marginal profit is

Price is defined as the amount of money charged for a product or service. In marketing terms, price is considered to be the sum of the values that consumers exchange for the benefits of having and using the product or service. Price is also the only element in the marketing mix that produces revenue—product, place, and promotion are all costs. There are three forms of pricing strategies: customer value-based, cost-based, and competition-based pricing. Customer value-based pricing uses buyers’ perceptions of value to set price and are also used to set the price ceiling for the product. Cost-based pricing uses the costs of producing, selling, and distributing products plus a fair markup for pricing. The cost of the product also sets a price floor. A competition-based pricing is one based on competitors’ strategies and prices and can help the company determine what kind of positioning it wants to take based on how it wants to compete, “such as becoming a price leader, offering the highest quality, or becoming a luxury brand”. (wiseGEEK, 2015)

Pricing is a pertinent issue in procurement and acquisition in organizations. Consumers buying the commodities of an entity should get clarity on pricing related issues. There is uncertainty in Pro

Pricing – all decisions must be made and documented at a regular marketing meeting. The strategy must be analysed and discussed to ensure that the change in price will have positive effect on sales.

Indeed, costs should be utilized as a gauge to set the lower bounds of the prices for the products and accommodations you are selling. An efficacious pricing strategy includes elements of several methods. However, regardless of the policy utilized, price must be justified by value to the customer. Recollect, ultimately, customers determine

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

Market structures influence a firm’s behavior and profit opportunity and are therefore critical to understanding how a market functions. The conditions that distinguish each market structure define the level of competition observed within the market which in turn determines the profit level that can be made. Because pricing strategies are intended to maximize a firm’s profit, understanding market competition is necessary when deciding an appropriate pricing strategy approach. The third section of this paper gives the pricing strategy for a real-world firm for each market structure.

A pricing strategy takes into account segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst others.

As a revenue manager, I will bring to the fore of the company the pricing strategies that can help enhance the company’s revenue. These pricings are the value-based pricing ¬– deals with the perceived value, creating an estimate of market demand on the basis of how customers will perceive the value of the service. Also, Value-added service pricing ¬– value added to service or product purchase by customers with the aim of enhancing perception of value – will be appreciated by me. Furthermore, reference pricing¬ - this Is the pricing expected by a consumer for a product to be sold – thus, it reflect the imaginations of consumer. As such, this will be imbibed with tactfulness (Jones, 2008).

The pricing strategy of Tesco is being developed accordingly to Tesco’s business strategy meanwhile pricing strategy would contribute to Tesco’s competitive advantage. To be more specific, based on the marketing message saying “Low Prices Everyday”, Tesco’s pricing strategy was made. Moreover, Tesco’s aim is to have reduction in cost purchase and operational cost in economics scale (Research Methodology, 2014).

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).

For reflecting the company’s objectives and market conditions pricing strategies needs to be applied. Market conditions, competition, quality of the product, market place are the factors that influence of the product pricing. If the company has chosen a good pricing strategy for their products they will have good profit and good company positioning on the market in return. For setting the prices for products the Pricing strategy matrix can be used.

Pricing policy refers to how a company sets the prices of its products and services based on costs, value, demand, and competition. Managers should start setting prices during the development stage as part of strategic pricing to avoid launching products or services that cannot sustain profitable prices in the market. This approach to pricing enables companies to either fit costs to prices or scrap products or services that cannot be generated cost-effectively. Through systematic pricing policies and strategies, companies can reap greater profits and increase or defend their market shares.