A major consideration in business from both the manufacture’s and customer viewpoints is and has always been the price.
The issue discussed here is” should the retailer practice “everyday fair pricing” or engage in “frequent price promotions”? Is it better for a brand to raise its regular price and offer price promotions or is the brand better off offering lower regular price with limited price promotions?
In my paper I will support and argue for setting the right price, which in other words make shoppers feel they are getting a fair shake from the businesses they regularly patronize.
Importance of setting the Right Fair Price
Pricing strategies are important criteria which affects the overall success of the company. The price set is simply not a financial issue but a marketing issue that determines how the product is positioned and how the market (customers) perceives the product.
Pricing is a challenge with different implications at any stage of the business cycle, whether you are setting the prices for the first time, raising or lowering existing prices, or determining how to react to an unsteady economic climate. Overprice and you will risk losing your business to your competitors. Under price and you may inadvertently devalue your offerings.
Tom McNeil, President of Executive Career Resource Group, Wellesley, MA describes the implication of price:
1. “Your price is too high, and you knock yourself out of the game.
2. Your price is much less than the client was prepared to pay, and you lose money.
3. Your price is much less than that of your competitors, and you are perceived as offering less value.
4. The client accepts your price but then decides that your services aren't worth it, because you haven't...
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...se the average ticket value of a purchase or even purchase frequency, but thy will not be generally profitable or engage customers. To do that retailers must design loyalty programs to facilitate an emotional connection with their customers that benefits both the retailer and the customer – a state called symbiotic loyalty.”
Retailers should analyze their product mix and customer knowledge needs before positioning the price. Price has a significant influence on consumers' purchase behavior and consequently on firm sales and profits.
Frequent Price promotions in fact, condition the consumers to expect deals and get desensitized to small ones. Retailers have to think about the customer behavior they want to encourage --or conversely discourage.
The greatest influence on the context of a purchasing decision is whether the consumer believes the price is fair.
A Couple of Squares should price their products based on customer value since there is no relationship between customers’ value for a product and the company’s costs. A Couple of Squares currently uses a cost based pricing system. Using a cost based pricing system can undercut profits due to customer value. If customers are willing to buy cookies from A Couple of Squares for twenty dollars and A Couple of Squares is only charging five dollars, they are losing out on a significant amount of profit. Basing pricing on customer value would also keep customers satisfied. Customers would be satisfied since the company is focusing on their individual needs. If the company prices their products based on customer value, the customer will be willing to buy the product because it is at a price they are willing to pay. Therefore, pricing based on customer value would maximize profits as well as customer
As we learned from Chapter 12, price must be carefully determined and match with firm’s product, distribution, and communication strategies. (Hutt & Speh, 2012, p. 300) Therefore, there should be a strong market perspective in pricing. In order to build an effective pricing policy, marketers should focus on the value a customer places on a product or service. One of the most effective ways to do so is differentiating through value creation.
Weakness: A lower price suggests the company’s total income relies more on the quantity of products sold, which may lead to financial issues such as shortage of capital turnover if the business cannot sell enough goods. However, recent researches on the feedback from customers from different online sellers have shown that the price is higher than their expectation, which may also deteriorate the sales amount in the future.
Due to the various options of distribution channels their prices vary. Consumers take that into consideration when purchasing their products.
Setting prices too high would discourage purchasing and setting prices too low negatively affects revenue. While several pricing strategies exist, the use of a value-based pricing system, as implemented at Cabela’s, offers an optimal strategy that meet both customer expectations and company requirements.
We are all consumers, and we buy diverse products every day. But, do you know what the main factor is that influences us to choose a product? If someone selects a cloth, maybe he pays attention to its quality! Customers’ decisions can be changed depending on what the main factors they are looking at. Various influences can cause consumers to select different products.
For commodity goods, consumers are more inelastic to price changes. As commodities are at affordable price, the price differences are rather small. Therefore, lowest price is not a main concern for most consumers.
With supply solely, factors involved with regulation of the supply also control some aspects of demand. Things such as production costs and desired net profit can determine whether a business succeeds or not. Having a balance between quantity and price is the greatest control any business can have. Pricing is obviously one of the most beneficial, or destructive, parts of a business. Pricing is the first and most valuable thing an individual will look at, which will overrule most other judgments based off of quality and detail. Balancing the price, however, helps to create a pristine product, with just the right amount of detail that will fuel the market, while still generating a steady net income.
Lying. This is connected to the above mistake. Clients like honesty, not lies. They don’t like being sold to something that they don’t want or need. They also don’t like being made a fool due to an error that they didn’t make. Lying to a client is almost an instant death wish for any company. In addition, they will leave frustrated and not going to come back again.
Price is the values entirety that consumers trade for the advantages of having or utilizing the product or services. Different places and cultural have different spending culture. Therefore the price has to be relevant according to the product offer because it can reflect the image of a
Now that you understand how price elasticity works and how it is calculated, it is time to take a closer look to the reasons its important for any business. Price tends to be an important part of consumer shopping decision and companies should understand just how important price is to consumers by calculating price elasticity of demand.
Price Elasticity is the measure in responsiveness of consumers to changes in the price of a product or service. The evaluation and consideration of this measure is a useful tool in firms making decisions about pricing and production, and in governments making decisions about revenue and regulation. “Price Elasticity is impacted by measurable factors that allow managers to understand demand and pricing for their product or service; including the availability of substitutes, the consumer budgets for the product or service, and the time period for demand adjustments.” The proper consideration of Price Elasticity allows managers to set pricing such that the effect on Total Revenue is predictable and adjustments to production are timely. The concept of Price Elasticity is employed in the management of commercial firms and government.
So when a consumer goes shopping and according to his real income, which is in general, very low, he finds himself in the obligation to search for the lowest prices in the market and acceptable quality not the best one for every product he is buying.
...e enough because the company has chosen the best possible way to increase the company performance. The pricing strategy is the company’s best strategy from all because it affected the sales revenue a lot. Although fluctuating the price is quite risky for a business since the customers might order from other companies if the company doesn’t do it properly, but XXX Company manage to done it well so far. The effectiveness might also be seen by the average of sales revenue between January to August from 2011 to 2013.
Price is what a buyer must give up to obtain a product. It is often the most flexible of the four marketing mix element that the price is the quickest element to change. A marketer can raise or lower prices more frequently and easily than they can change other marketing mix