The Role of Internal Pricing Within Companies

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

[MARKETING TODAY] January 24, 2011 True-False - Terminology/Concept 1. Marketing-related activities are limited to people called “marketers.” 2. The effective practice of marketing-related activities is limited to larger firms. 3. For virtually every good and service we purchase, the marketing process affects the assortment of models and styles offered in the marketplace. 4. The scope of marketing includes goods, services, organizations, people, places, and ideas. 5. A firm can anticipate demand through marketing research and sales forecasting activities. 6. A firm can stimulate demand through offering credit and by expanding a product’s distribution to include additional retailers. 7. Installation, alteration, and repair services are all

A company would have to use strategies outside of price to lure consumers in such as aggressive advertising, better customer support, market saturation,

Summary: The focus this week was on uncovering any and all existing data related to the Pricing Desk process. Any metrics that measure the cycle time is of extreme importance.

Explain how the demand curves for normal products and for prestige products differ, what are demand shifts and why are they important to marketers? How do firms go about estimating demand? How can marketers estimate the elasticity of demand?

In understanding pricing, costs, and profits for industries, one must understanding the following areas: demand curve, marginal analysis, stay-even analysis, marginal cost, economies of scale, learning curve, economies of scope, shift in demand, shift in supply, market equilibrium, and strategies for keeping profit from eroding. These are the critical function that every organization or industrial business needs to be successful. The upper management team needs to know and understand that concept of economics in order to make the best decision for the industry or the organization.

Allround: Pricing was changed in line with the reported inflation, comparing with competitors and customer feedback from preceding periods. The price was varied in such a way that the firm absorbed minimal costs while most was passed on to the customer. The price for Allround throughout its lifecycle was higher than the main competitor (Besthelp). The main reason for this premium pricing was the high brand awareness and loyalty that made Allround the leader in the market. Mass discounts were varied based on sales report until a balance was found.

McKinsey & Co., 2004 write about the difficulty of pricing an item. The article explains that charging too much for an item is much easier to fix

There are different types of market structures all over the world since business is not done the same way everywhere. Even within the USA different companies use different pricing strategies based on the market structures. As a business and as a consumer it is vital to identify and understand these different types of market structures and their pricing strategies. The ideal type of market is the one where price and demand are not affected by anything, in other words it is always consistent. Of course the reality is that markets are affected by different factors, which can hike up the price for an item or lower it, hence increase demand or decrease it. There are 4 different types of market structures

Value pricing is a rationale that sets price through the estimation of client perceived value. Value pricing reverses the traditional value proposition of cost-based pricing by recognizing that the client is the ultimate arbitrator of value (Baker, 2009). To better capture value, companies are trying to understand clients’ desired value, affect customers’ perceived value, and gain more bargaining power (Töytäri, Rajala, Alejandro, 2015). Some companies tried value pricing, but they were forced to re-adopt cost-based or competition-based pricing because they lack both experience and knowledge of value pricing. Implementing value pricing involves transformational changes that require inputs from

Pricing strategies can vary from offering relatively stable prices across a wide range of products, which is known as Everyday Low Pricing (EDLP) or Promotional Pricing (PROMO) which involves emphasising deep and frequent discounts on smaller sets of goods (Ellickson and Misra, 2008). The EDLP store adopts a constant everyday low prices across a wide range of product categories, whereas PROMO or Hi-Lo stores occasionally price a category at the regular price or at a deep discount (Bell and Lattin, 1998). Ellickson and Misra (2008) argue that the concept of choosing the best pricing strategy is a complex process as it forces firms to balance the preferences of their consumers, as well as taking into account their competitors performances in terms of the store pricing and market share.

One of the most challenging and essential task of Managers involves pricing their products and services. Pricing mistakes can diminish and or destroy an otherwise promising business. High prices can drive customers away and hurt an organization. Simultaneously, prices that are too low can indeed, robs the ability to earn a profits giving the impression that the products are inferior.

Transfer pricing is an internal practice within an MNE and thus it is insulated against the open market forces of demand and supply. In competitive open markets, the forces of demand and supply would interact to determine the price at which goods and services are transferred. While these forces could have an impact on transfer pricing from a macro perspective, their impact on intra-group pricing can be limited.

In general, a products perceived value may be increased in one of two ways – either by:

Since more than 25 years the idea of internal marketing has been discussed in a wide range of the academic literature. The confusion has been further increased several practitioners and researchers over the years as there is a great confusion about its exact definition but today IT is described as activities, actions and managerial directions an organization tool to attempt and inspire and generate employee