The Pricing Strategy Of The Faucet Industry Essay

The Pricing Strategy Of The Faucet Industry Essay

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Kohler is one of the biggest brands in the faucet industry offering a way variety of products in its brand portfolio through numerous distributors. Looking at the faucet industry, which Hygieia will be brought. The pricing structure can vary from $150 through $1,200 depending on the materials, cost, and even where the product is marketed to. Hygieia will be brought into the industry with its differentiated features at a price point of $449. When the product line is successful we plan to manufacture a lower price point option, and a third higher price point option.
Value based pricing was the pricing strategy we used to determine the current price point. Prior to our concept and design, we looked at the customers’ needs to solve a current problem, which was poor hand washing habits. We then assessed the value perceptions to help determine a target price to match the target value. From there we went to the drawing board, and based on the information we gathered we developed the Hygieia. The current pricing was to match the customers perceived value, and to cover the costs incurred in manufacturing. (CITEbook)
The reason we took this approach was because when developing the Hygieia, we didn’t want to make the mistake of designing a product without any research on customer values in our markets. Costs are important to take into consideration when setting prices. If we made the mistake of setting the prices too high for a product our customers didn’t want, it would have been a very disappointing outcome. If the price turns out to be high, Kohler would have settled for lower markups or lower sales.
By pricing the Hygieia from researching consumer needs and value perceptions we were able to design a product around the...

... middle of paper ...

...can range from $150 through $1,200, and depending on the segment they focus on such as residential, or commercial. Looking at the majority of pricing offers the Hygieia, undercuts most of the market being right in the middle of the pricing structure while offering better features for an affordable price.
Compared to the market the $449 price point might not be affordable to a percentage of the population. We are trying to focus on the income levels of $50k and more annually. When this product line is successful, we will explore on expanding the Hygieia brand to have an more affordable product, and also a higher end version we hope to see come out next year. The current price is set to see a 55.5% profit margin; we can adjust this price if it seems fit to help increase sales during the holiday times, promotions, or with additional incentives.


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