Smart Phone Pricing and Distribution Channel Analysis
The pricing strategies and tactics of innovative products including smart phones more effectively and clearly define their position in a market compared to another other strategy including marketing and advertising (Piercy, Cravens, Lane, 2010). The decision to pursue a specific pricing strategy will have a long-term impact on how the value of the smartphone is perceived by customers, and will also impact how elastic a potential new market is. Due to all of these factors over and above covering costs and ensuring a sufficient gross margin for profitability, pricing is the most strategic of marketing strategies there are (Marn, Roegner, Zawada, 2003). The intent of this analysis is to present a pricing strategy for a new smart phone, determine and discuss pricing tactics for the phone, and identify any legal and ethical issues related to the chosen pricing tactics. In addition, marketing distribution channel analysis and how the distribution strategy fits with the product, services and overall marketing objectives of the company are assessed.
Defining a SmartPhone Pricing Strategy
In creating a pricing strategy, the objectives of defining value-based differentiation in the smartphone market needs to be addressed, in addition to evaluating the pricing strategy based on competitive forces in the market. Choosing a value-based, skimming strategy is recommended based on the analysis completed in this section. Value-based pricing with a price premium is the most effective strategy as it will first position the smartphone in an area of the market where commodity-producing market dynamics aren't as prevalent (Piercy, Cravens, Lane, 2010). Pricing above the area of the market where price wars dominate vendor marketing strategies not only saves gross margins and profitability, it saves brand value too. Choosing a value-based pricing strategy that skims the top of the market will ensure the new smartphone isn't shopped on price and availability alone, further distancing the new product from commodity-driven selling.
Value-based pricing that supports a skimming strategy will also attract an entirely different segment of customers than competitors who complete on price alone (Allsopp, 2005). This is evident from how successful Apple is with the iPad and iPad2 series of tablets, where their value-based pricing continues to be very successful in attracting a new customer segment to the company (Piercy, Cravens, Lane,...
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