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Read about Pricing Strategies here Take a quiz on pricing strategies here View a powerpoint here
Marketing Exercise
Marketing Mix Exercise Two: Pricing Strategies.
Right, you’ve got the product right; the next stage is to price it. Wow what a task!
1. List the factors LM Ltd will have to take into account while deciding how to price the product.
2. What combination of pricing strategies could LM Ltd consider?
3. Work out a pricing strategy as the product moves through the four stages of the product life cycle. Plot how your pricing strategy may change at it moves through the product lifecycle.
Answers
1. List the factors LM Ltd will have to take into account while deciding how to price the product.
The factors LM Ltd will have to take into account when pricing include:a) Levels of competition.
b) Fixed and variable costs.
c) Competition..
d) Company objectives.
e) Proposed positioning strategies.
f) Target group and willingness to pay.
2. What combination of pricing strategies could LM Ltd consider?When selling computers LM Ltd could use the following pricing strategies:
- Competition pricing: Pricing the computer products similar to competitors.
- Bundle pricing: Bundling the computers with scanner, digital camera, printer.
- Psychological pricing: Selling PC’s at £499.99 or £999.99, just below the psychological price of £500 or £1000, whatever price the company decides.
- Optional pricing: Giving the users the options of upgrades as is common in the PC industry.
3. Work out a pricing strategy as the product moves through the four stages of the product life cycle. Plot how your pricing strategy may change at it moves through the product lifecycle.
Introduction – Premium psychological price. Product is new with latest technology.
Growth –Skimming price reduce price as product sells grow.
Maturity – Physiological pricing, with price lowered offered with bundles.
Decline – Product line pricing, reduce price on existing model and introduce new.
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Further reading:
Principles of Marketing by Philip Kotler
Principles of Marketing by Frances Brassington
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