From a competitive standpoint, the firm must consider the implications of its pricing on the pricing decisions of competitors. Pricing must take into account the competitive and legal environment in which the company operates. The pricing policy should consider both types of costs. The total unit cost of a producing a product is composed of the variable cost of producing each additional unit and fixed costs that are incurred regardless of the quantity produced. The unit cost of the product sets the lower limit of what the firm might charge, and determines the profit margin at higher prices. If the firm has decided to launch the product, there likely is at least a basic understanding of the costs involved, otherwise, there might be no profit to be made. Inelastic demand indicates that price increases might be feasible. Estimate the Demand Curveīecause there is a relationship between price and quantity demanded, it is important to understand the impact of pricing on sales by estimating the demand curve for the product.įor existing products, experiments can be performed at prices above and below the current price in order to determine the price elasticity of demand. There usually is a tradeoff between product quality and price, so price is an important variable in positioning.īecause of inherent tradeoffs between marketing mix elements, pricing will depend on other product, distribution, and promotion decisions. Marketing Strategy and the Marketing Mixīefore the product is developed, the marketing strategy is formulated, including target market selection and product positioning.
Nonetheless, the above list serves to present a starting framework. These steps are interrelated and are not necessarily performed in the above order. Set pricing objectives - for example, profit maximization, revenue maximization, or price stabilization (status quo).ĭetermine pricing - using information collected in the above steps, select a pricing method, develop the pricing structure, and define discounts. Understand environmental factors - evaluate likely competitor actions, understand legal constraints, etc. Make marketing mix decisions - define the product, distribution, and promotional tactics.Įstimate the demand curve - understand how quantity demanded varies with price.Ĭalculate cost - include fixed and variable costs associated with the product. While there is no single recipe to determine pricing, the following is a general sequence of steps that might be followed for developing the pricing of a new product:ĭevelop marketing strategy - perform marketing analysis, segmentation, targeting, and positioning. Furthermore, pricing affects other marketing mix elements such as product features, channel decisions, and promotion. Pricing is an important strategic issue because it is related to product positioning. One of the four major elements of the marketing mix is price.
Marketing > Pricing Strategy Pricing Strategy
0 kommentar(er)
