I need your help with my Marketing assignment. I have been asked to summarize \"
ID: 449929 • Letter: I
Question
I need your help with my Marketing assignment. I have been asked to summarize "Pricing Decisions" topic into one to two pages. "Pricing Decision" contains the following main points:
1. Processing of Making Pricing Decisions
- Strategic Pricing Objectives
- Estimating Demand and Perceived Value
- Estimating Costs
- Analyzing Competitors' Costs and Prices
2. Methods Managers Use to Determine an Appropriate Price Level
- Cost-Oriented Methods
- Competition-Oriented Methods
- Customer-Oriented Methods
3. Deciding on a Price Structure: Adapting Prices to Market Variations
- Geographic Adjustments
- Global Adjustments
- Discounts and Allowances
- Differential Pricing
- Product-Line Pricing Adjustments
Explanation / Answer
Pricing Decisions
A marketing manager/concerned authority should identify and study the relevant factors affecting the pricing strategy. Some factors are internal to organisation and, hence, controllable while other factors are external or environmental and are uncontrollable. So both favtors has to be diagnoised and thorughly considered for taking final decisions.
1. Processing of Making Pricing Decisions
Strategic Pricing is a very calculated decision after realizing the marketing situation and our objectives. It can be pricing policies accoriding to market penetration ( market entry), product differentation pricing , premium pricing ( for elite and supreme product placing strategy)
Demand planning is an important factor which drives pricing decisions . As demand is propotionate to price directly. Demand planning can be analysed via historical data and current trend nd projection using statistical modeling. Real time survey and marketing counceling helps in determining the market demand trends. Competitor is an inevitable player in all markets. So understand the pricing and marketing strategy of competitor is a difficult task at the same time very required as well.Ethical ways by purchasing competitors product or through window shopping and udnerstand the process and service level of competitors actually helps in fixing the product price on realistic way and such costing pf product is called as percevied cost and the value generated via customer on the same product is called perceived value.
Methods Managers Use to Determine an Appropriate Price Level
Managers can drive the decision in pricing through 3 ways. It can be cost oriented if immediate profit making is the decision variable .or competiors pricing method by supressing the compeition and entering the market thorugh low price and later on stabilise through standerdised or normalised price. For better reach of brnd such strategy is improtant. Customer oriented pricing can be done for selected priduct ranges and differential pricing cannot be applicable for all categories. Based on value and potential of customer price can be varied.
Deciding on a Price Structure: Adapting Prices to Market Variations
Geography adjustments and global adjustments has their own significance in establish a product on the particular region. Many FMCG companies like Pepsico, Nestle etc has localised pricing and marketing strategy to feel the product more homely and to build their own maket base.
Discounts on festival or celebration time attract more customers to buy the products and profit can be tapped through economies of scale. Customised discounts on more purchasing and for long term commitment also enhance the customer loyalty.Product line pricing strategy is meant for differentiating quality of products based on price. Automoiles and electornic goods pricing use this kind of strategy as quaity and features (specefication) increases price also increases. It tends customers to buy premium priced products to get the full options or full features.