Pricing Strategies
There are a number of factors that go into a firm's pricing strategy. The firm can consider the prices offered by competitors and the firm's own desired competitive position. It can base prices on the cost of production. The firm must consider the price elasticity of the demand for the good. The company can also choose from a number of different strategies, based on this demand curve: revenue maximization, profit maximization, cost leadership, penetration pricing and more. Other strategies include skimming and other forms of price discrimination (NetMBA.com, 2010). For example, if Brooks Brothers priced its goods differently for different marketing channels such as the Internet or a retail channel partner like Nordstrom, this would be a form of price discrimination.
These different pricing strategies are used to achieve different objectives. For a luxury brand like Brooks Brothers, the price will support the luxury brand image. Prices therefore must be relatively high. While the quality of the goods is high, the company is deliberately choosing not to compete on the basis of high quality at a low price (value proposition) but high quality at a high price. As the result of this strategy, the high price reinforces the luxury image of the brand. It has been hypothesized in the past that buyers of luxury goods often have reverse price elasticity of demand wherein the higher the price is the higher the demand will be (Kapferer & Bastien, 2009).
For Brooks Brothers, it must consider its overall strategy when setting prices. Because its customers have a relatively low level of price sensitivity, the company can reasonably assume that it will cover the costs associated with production, distribution and marketing. Its market share is firmly established, so there is little need for penetration pricing. Indeed, lowering costs would like...
Pricing Strategies Price and cost variables are not fixed. At times, there are some fixed elements to these costs but in many instances these costs are subject to fluctuation. These fluctuations can derive from changes in buying power, changes in commodity prices and other considerations. Likewise, forces in the external environment can bring about changes in the prices the firm can charge. When uncertain variables are fixed, the company can find
Pricing strategy for our new product is going to be penetration pricing. This strategy involves undercutting the competition on price in order to win market share. Undercutting does not necessary mean that the firm with follow a cost leadership strategy, but it implies that the firm will price below the prices of competing products with similar attributes. A penetration pricing strategy implies that the firm will maintain the low price
Pricing Strategy How well does Apple create value for its market segments? Explain. The way that Apple creates value for its market segments is by finding areas that are emerging, as a new way to incorporate technology into daily life. Where, there is an emphasis on implementing the latest technology with: changes in the industry and transpiring demand (to redefine how people are entertained). A good example of this can be seen
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Pricing strategy needs to take into account a number of different factors. These include the costs of production, the positioning of the product, competitive pricing, and the customer's willingness to pay. Selling Chapman's ice cream to the United Arab Emirates is going to take into account some of these more than others. With respect to cost of production, there are two factors that need to be taken into consideration. The first
market structures and the pricing strategies which are specifically related to each of them. The introductory section of the paper gives an overview of the four major types of market structures and explains the main features which draw distinguishing lines between them. These major types of market structures are perfect competition, monopolistic competition, monopoly, and oligopoly. The second section discusses the pricing strategies which are used by competitors in
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