4 P's Of Pricing Strategy Essay
Pricing Strategies
What are the various pricing strategies at the disposal of an organization?
Pricing is defined as the process of what a company will receive in exchange of its services or products. It can also be defined as the method adopted by a firm to set its selling price. Factors that influencing pricing include manufacturing cost, competition, quality of product, brand, market place and market condition.
Pricing strategy: It’s the pursuit of identifying the optimal price of a product. This strategy is combined with the other marketing principles known as the 4 P’s. The pricing strategy is one of the most critical components in the marketing mix and is focused in generating revenue and ultimately profit for the company.
Pricing strategies can be
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Pricing strategies to attract customers / increase profit
• Premium pricing Strategy: - This occurs when an organization makes a good more expensive to try and give the impression that it is better quality, e.g. ‘premium unleaded fuel’, fashion labels.
• Price Discrimination Strategy: - This involves charging a different price to different groups of consumers to take advantage of different elasticity’s of demand. There are different types of price discrimination from second degree to third degree.
• Reference Pricing Strategy: - This involves setting an artificially high price to be able to later offer discounts on previously advertised price.
• Price Matching Strategy: - The purpose behind price matching is making a promise to match any price cuts by your competitors. The argument is that this discourages your competitors from cutting price. This is because they know there is little point in cutting prices, because you will respond straight away. Very clear price matching stances can thus avoid price wars and give the impression of being very competitive.
• Retail price mechanism RPM Strategy: - This occurs when manufacturers set prices for retailers i.e. EABL and Coca-Cola set RPM price for their
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