Pricing Strategy I Email Files. Pricing Overall

Pricing Strategy

I email files.

PRICING

OVERALL COSTS

The initial set up and marketing costs in starting the business will be treated as capital costs and thus, they will not be considered in the determination of the product and service price. The cost to be considered in setting price will be:

Tire Purchase cost

Cost of tire shipment

Buildings lease hold cost entailing the office and store rents,

Sales and administration personnel costs,

Future costs of marketing, advertisement and promotional activities

Cost of market evaluation exercises

Legal fees and Licenses

Materials used in service provision

Factory running costs including Electricity, heating and lighting costs

Price Setting

To incorporate these costs a 25% markup price will be charged on the tires' shipment and purchase cost. This percentage will suffice to cater for the business operations and overhead costs. The mark up price setting will serve for normal demand trends in ordinary market (Kotler, 1997).

TEMPORARY PRICE PROMOTIONS

Temporary price promotions will be considered when there is low demand for tires or harsh economic time. The price promotion will be considered to boost sales revenue and increase the businesses grasp in the market.

In case of potential competitors, temporary promotion price will be considered to retain demand for the products and services. Competitive pricing strategy will however, ensure that commodities contribute to business expenses and profits. Competitive price will also target low cost tires since they have a price elastic demand.

Additional promotional pricing strategy will be used where new tire products are introduced in the product range or the company is venturing in a new market. This strategy will enable the business to attract demand for tires and increase its market share.

Promotional price on seasons such as holidays will be used to serve as a means to communicate the company's existence, excite current customers and entice potential customers. This strategy will serve to increase the company' revenue and also retain customer.

The promotional prices will be on quantity discounts, specific products or for purposes of clearing old stock. Additional the promotional prices, gift contest promotional will be introduced to serve as customer loyalty advantage prize.

PRICE DISCRIMINATION

The business venture will also segment the market to identify possible partnering companies. The partnering companies will comprise of tire outlet shops, tire service stations and shops and, large transport companies. These companies will be considered as Endovile's market intermediaries' for whom a discount price on their purchase will be considered. The discounted prices will serve to encourage large quantity purchases and customer loyalty.