Pricing And Pricing Strategies

Pricing Objectives involve specifying the role of price in an organization’s marketing and strategic plans. These

The vendor anticipates that the typical consumer will purchase other items at the same time as the loss leader and that the profit made on these items will be such that an overall profit is generated for the vendor. Typically, a loss leader is placed at the back of a store requiring the consumer to walk past racks and racks of other displayed goods which have a higher profit margin. Additionally, a loss leader is normally a product that customers are willing to purchase; thus they are aware of the usual price and view the offered price as a bargain (Wikipedia, 2005). Wal-Mart effectively utilized loss leader pricing to generate profitability but it was not without its pitfalls.

When a business can provide a lower cost, then the business can have the ability to lower their price. Providing a better pricing system, along with sharp value products can only increase the chance of growth and customers’ overtime.

The customer expects the prices to remain low for a long term. They are not ready for the subsequent rise in the price and when it happens they might switch to a competitor's product. Thus subsequent price hike leads to loss of market share

This occurs when a business charges the highest price for a product during the introduction stage of its lifecycle. This is typically used when introducing a new, unchallenged product into the market, ensuring high profits before the product has competition. For example, Apple set its price for its iPhone 6 plus exceptionally high due to its advanced features and lack of competitors. This ensured that Apple received high-profit levels before the iPhone 6 plus was challenged by other products. Additionally, this has seen Apple have a high product position and helped cement its brand image, as these higher prices are typically associated with a higher quality product. This has subsequently improved market share and profits.

Price is defined as “The value that will purchase a finite quality, weight or other measure of a good or service” (Business Dictonary). When growing up your parents always said, this is too much money so you wouldn’t be able to get that candy bar or video game because the price of the product was too high. Whether this be because of high price the person that made this product had to out some research into the idea of how much they should sell this product for, how much profitability am I making at the end of the day after all deductions are taken out. The price is what set’s your product apart but a high price mean’s that you need to market the product very well to get people to buy it and build a quality product to get raving reviews. At Starbuck’s they always advertise giving you incentives and low prices. Summer time they do Ice Blended hour, which from 3 pm to 5 pm they offer their ice blended

This is a strategy that can apply to products with consumable supplies. This is where the pricing at high prestige levels, otherwise they will not sell; customers equate higher quality with higher prices.

Higher value can attract more customers or increase the profit margin for the value add benefit.

Swing Manufacturing and Steady Manufacturing both operate in the widget industry, but with radically different cost structures. Swing is a capital-intensive, automated manufacturer, while Steady is a labor-intensive "job-shop." Monthly operating data are as follows:

The objective of a company using a low-cost provider strategy is to sell its products at the lowest possible price to attract customers. This is known as a price advantage. Companies using this strategy will typically earn low margins but achieve high sales volumes. Low-cost providers aim their products at the broad market, making them appeal to as many consumers as possible to achieve high sales volume.

The setting of ‘fair’ prices to consumers: the company should bear in mind that customers nowadays will shop around to compare the intended products and services. However for the business survival and growth purposes, the company should also maintain its profit margins to ensure its business growth and expansion. The company needs to consider its cost factors and business operation areas to reduce or minimise the costing areas.

This strategy guarantees that the company does not loose out on the venture by covering their fundamental costs of operation. This allows them to keep the price low enough to entice consumers while simultaneously hedging themselves from the risk of losing money on each item sold. This is basis for a market penetration strategy.

By having this advantage, the low cost company is able to do a number of things to maintain or increase its market share.  It can invest more in marketing.  It can pay for better positions in retail stores relative to its higher cost competitor.  It can lower price, thus squeezing its competitor’s margins and profits.  It can invest more in research and development, allowing it to improve the performance of its product.

The main objective of a low-cost provider is to achieve a lower overall cost than its main competitors and rivals by means of underpricing (Gamble, 93). This is also known as price advantage in order to attract customers. Companies that use this strategy will achieve high sales volumes while striving for low cost margins. For example, Wal-Mart is known to have considerable low prices that attract a broad spectrum of customers. People who shop at Wal-Mart are familiar with their “Rollback Prices” which focus on the idea of everyday low prices that are sold at a far cheaper rate than its main competitors. They are able to sustain these prices because of a successful supply chain market. Many of the products they sell are from foreign and domestic markets that focus on a lower price demand. This allows Wal-Mart to sell their products at lower prices at a high volume. Basically, they buy a huge quantity in volume in order to achieve a lower price to gain a higher profit.

In order to make a profit, a business should ensure that its products are priced above their