Unit 3: Investigating Business

Competition within the industry as well as market supply and demand conditions set the price of products sold.

When trying to determine the correct price, a number of factors must be considered: the market and its segments, the size of each segment, the ability to reach each segment, what distribution channels to target, whether to vary price by segment, the usefulness of promotional offerings, and whether the goal is to skim or penetrate each market.

Third, the price must be high enough to cover costs and make a profit but low enough to attract customers. There are a number of possible pricing strategies. The most commonly used are:

There is no exact theorem for determining how to price a product but the following can act as a heuristic of sorts:

Marketing is the management process involved in identifying, anticipating and satisfying consumer requirement profitably. This marketing mix comprises of product, price, place and promotion (Surridge and Gillespie pg.190). Sometimes people argue that an element of the mix is more important than the others but I do believe that they are all equally essential for the success of a product. In this essay, I am going to explain the various elements of marketing mix, if the product is the most important element of the marketing mix, and the importance of an integrated and consistent marketing mix.

In terms of theory, pricing strategies can be defined as businesses choosing one method to appeal to customers to purchase goods and achieve marketing mix according to the assessment of consumer demand and cost analysis (BDS Forum, 2009). For a company, pricing strategies can be made difficultly. If prices of goods are too higher, they may lose market share. If the price is two lower, the company cannot get bigger profit (Bized, 2006). Therefore, before developing a pricing strategy, the company has to consider much more factors. Such as pricing objectives which rely on production cost, barriers to entry, rate of product diffusion and so on, pricing methods including cost-plus pricing, target return pricing, value-based pricing and psychological pricing as well as other factors to make the best price for the firm and the consumer (Net MBA, 2009). Three points of views of pricing strategies can be discussed in the following in this report. Firstly, pricing strategies should

Competition within the industry as well as market supply and demand conditions set the price of products sold.

Based upon the offering and the overall strategy and market conditions, the price will need to be set. If the company is utilizing channel partners, they may want to consider a cost plus pricing model when making deals. This approach allows the company to make profits when costs are somewhat variable. (Tanner, 2015, p. 331) The company may also consider a high initial price for the product either to convey status (prestige pricing) or as a skimming approach to recoup any research costs. (Tanner, 2015, p. 330-331) Depending on the channel choices, the company may use one or more pricing methods. Knowing how many levels (steps between the company and the consumer) are present in the distribution channel

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

Very often during the preparing of marketing plan the process of pricing is not on the top. But the price has big influence on marketing decisions and its efficiency. Speedily made decisions about the price without any researches and analysis can lead to the company’s losing revenue.

We calculated the cost of our product and added percentage of mark up price for the selling price. We come up to these prices by cost based pricing and comparing the different prices which serves same product concept as ours. The price of our product may still vary depending in the ingredients supply, chicken and pork and ingredients sometimes increase in price.

Making decisions are hard enough already, adding a tough decision to decide on which pricing strategy to choose from brings a great deal of stress to a company and the individuals that has to make the decision. Pricing consist of technique, strategy, planning and eventually success of the item and its number of sales. After carefully reading the background information, I realized that there’s more to pricing than just making a profit. Factors come into play from many different angles. Competitors effect the way companies price their product, the strategic planning of the organization itself effects prices. Weather a company lower its product manufacturing costs or use either a lower or higher material to produce the product effects the price customers are willing to pay. There are multiple pricing strategies that companies use to decide the price of their product, strategies such as; good-value pricing, value-added pricing, and value-based pricing to name a few. Companies have certain cost in which they have to cover when trying to price an item. The three major categories for costs of a company is fixed cost; price that do not vary with production or sales, variable costs; costs that vary directly with the production of the product, and there’s total cost; the sum of the fixed and variable cost for any given level of production (Pearson). Overall, making a decision on how much to charge for certain products requires many factors. Based on my knowledge and understanding on

The primary objective of any business organization is to maximize the profits from its operations in order to enrich the wealth of its investors. This calls for provision of high quality goods or services at competitive and optimum prices which allow the company to make good returns while, at the same time, not exploiting their clients. As a result, businesses are forced to come up with good pricing strategies to achieve this. However, pricing strategies are different for businesses depending on the market structure in which they operate. Markets can be classified as perfect competition, monopolistic competition, oligopoly and monopoly. Each of these structures has different characteristics and conditions that call for different pricing

Careful selection of a pricing objective should lead you to the appropriate strategies. If the pricing strategy you choose seems to contradict your chosen pricing objective, then you should revisit the questions posed in the introduction and your marketing plan. Different pricing strategies can be used at different times to fit with changes in marketing strategies, market

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).