MKT/571

PRICE SETTING PLAN 6

Price and Channel Strategy

Regina Snedecor

MKT/571 Marketing Management

April 10, 2017

Heidi Kelley

Price Setting Plan

The pricing strategy that an organization utilizes in its operations is significant. Pricing significantly impacts the operations and gains of an organization in significantly diverse ways. An organization has some ways through which it can establish a competitive advantage through the utilization of marketing strategies. When for example the team manages to lower its prices compared to the prices that competitors are offering, its products are likely to increase demand significantly. This aspect makes the organization attain more gains compared to the benefits that the competitors are achieving. An organization, however, cannot just lower its prices. Many aspects require considered, which determine the amount that the club offers its products. An organization cannot lower prices to a level that is less than the cost or producing the products. By doing so, the team could only be operating at a loss. There are some essential elements that it should, therefore, consider when it is determining the prices for its products and when establishing the pricing strategy that it intends to use (Smith, 2012).

The first essential element to consider is the distribution strategy of an organization. The distribution of the products that the organization offers is significant. Through it, the team manages to establish convince of the products to the customers. When products distributed, customers manage to attain them much easily from shops and shopping centers of their convenience. With this aspect, the organization manages to increase its number of sales, since many individuals can purchase its products. An organization has some ways through which it manages to attain gains. The first main way is through the increase in the number of sales. By increasing sales, the unit profit that the organization reaches from selling products increase significantly. Another main way through which the group manages to increase its profit margin is by reducing the cost of production. The cost of production is also a major factor that affects the pricing of products that an organization offers. When a product incurs a prohibitive cost of production, it also attracts a high price. The cost of production is inclusive of the cost of distribution channels among other aspects. Establishing good distribution channels that are likely to increase the number of sales and at the same time, the channels that do not incur a prohibitive cost to build therefore provides the organization with the ability to reduce prices for its products (Boussabaine, 2013).

Another essential element that groups consider is the strategy of pricing that is appropriate for their operation. Different organizations utilize two main pricing strategies in diverse ways. The first main strategy that they employ is static pricing strategy; this is a pricing strategy where the group maintains a certain price of its products throughout without changes despite the changes of aspects like marketplace demand and consumer’s ability to purchase the products. The other strategy that utilized is the dynamic pricing strategy; this is a strategy where the organization sets flexible prices, which it changes about aspects like demand and another marketplace changes that might take place. Each of these market strategies is important and appropriate for certain occasions and certain business organizations. For our business, however, dynamic pricing strategy is more suitable. This form of a plan would allow the teams to alter prices about changes that occur. This aspect would make the organization attain significant and highly appropriate gains from its pricing strategies.

The others essential element that significantly affects pricing is the aspects of daily pricing, promotion pricing, and list pricing. An organization can increase its gains through the establishment of flexibility in its pricing strategy. It can also manage to effectively utilize both the dynamic and static pricing strategies in separate occasions and sessions of business. It can, for example, decide to use the static plan in its daily prices where it maintains a fixed rate during the regular days of business operations, but then changes that strategy to dynamic in certain days like the promotional days or when there is a significant need for the same. This pricing strategy would simply be highly appropriate and relevant for both the organization and the customers. During the promotion sessions, the team can decide to lower its prices with a certain percentage. This aspect would increase the demand for its products significantly. Maintaining a reasonable price during the regular days would also be appropriate since customers would not attain an exploitation aspect when prices are increased (Schindler, 2011).

References

Boussabaine, H. (2013). Risk pricing strategies for public-private partnership projects. Chichester, West Sussex, UK: Wiley-Blackwell.

Schindler, R. (2011). Pricing strategies: a marketing approach. London: SAGE.

Smith, T. (2012). Pricing strategy: setting price levels, managing price discounts, & establishing price structures. Mason, Oh: South-Western Cengage Learning.