The Importance Of Cricing Strategy

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A pricing strategy is an important element of marketing mix since apart from being related to the positioning of the product, it has effects on other elements of marketing mix including channel features, promotions and product features. The strategy in its development has some general steps that necessitate following including developing a market strategy, making market mix decisions, estimating the demand curve, calculating the cost, understanding the environmental factors, setting price objectives and determining the price without necessarily following the order. The various pricing strategies include cost- plus , target return , value- based and psychological pricing. In cost- plus pricing, the price is set at the cost of production in…show more content…
The television is said to have a display that is far much better than those of any competitors in 3D television. Though the company has to still compete with other television manufacturers, its patent and superior technology is said to give it a competitive advantage in the 3D television market for at least a year or two. For such a company, the most appropriate pricing strategy would be that of value- based pricing. Value- based pricing strategy does not set the price exclusively but primarily in the estimated or perceived value not to the historical prices or product cost but to a customer. This would be efficient since the company in question does not expect stiff competition until a year or two has passed which means that it will be able to make make profit since th prices are higher even thought the sales volume may not be impacted greatly. Another reason for the appropriateness of this strategy would be because the company's product is based on the emotions which in this case is that its a trending product. The product with such features is also currently being offered only by this company which holds a patent on its technology hence creating its shortage in the niche market. The pricing of the company's product through value- based strategy…show more content…
The individual and the business partner plan to become known as the premier manufactures and designers of blue jeans in the world. They are said to hope in having a very high end brand well known among the wealthy and fashion conscience. The most suitable pricing strategy for this company would be the target return strategy. In this strategy, the price to be set for the product being offered is calculated with the aim of returning a certain amount of desired profit or a return on investment rate while assuming that a certain product quantity is sold. In this case , the company anticipates that they will have a high end jeans brand that is well known and is willing to invest which would cost them a lot since the brand is expected to be the best in its manufacture and design. The fact that the product will be sold to the wealthy and the fact that the business partner is a top designer adds to the presumption that the investment being made will cost a fortune. This indicates that the partners have to come up with a return on investment rate which will not only cover for the costs associated with the investment but also include a desired profit

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