...Basic four strategies of service. Service firms vary widely in their abilities to serve different types of customers well. Hence rather than trying to compete in an entire market,each company needs to focus its efforts on those customers it an serve best. The extent of a company’s focus can be described along two dimensions: market four and service focus Market focus is the extent to which a from serves few or many markets, while service focus describes the extent to which a firm offers few or many services Fully focussed - A fully focussed organisation provides limited range of services (perhaps just a single core product) to a narrow and specific market segment. Developing recognized expertise in a well-defined niche may provide protection against would- be competitors and allows a firm to charge premium prices Disadvantage - The biggest risk of the fully focussed strategy is that the market may be too small to get the volume of business needed for financial success other risks of the fully focused strategy include the danger that demand for the service ay decrease because of alternative products, new technologies offered by other providers or that purchasers in the chosen segment may be affected by an economic downturn example - a) hospitals that operate only cataract or limb replacement (jaipur legs……. b) a popular newspaper (deccan ) which sells only news paper Market focussed - (Narrow market but wide range of services) A market focussed company...
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...PRICING OF INDUSTRIAL PRODUCT AND SERVICES Introduction “Price is the measure by which industrial customers judge the value of an offering and it strongly impacts brand selection among competing alternatives”. (Shipley and Jobber (2001, p. 301). Pricing is a process where a business firm sets the price at which it will sell its products and services in such a way that it can generate profit as well as satisfy the customer, and it may be a part of the business’s marketing plan. Price management is a very critical element in marketing and competitive strategy and a key determinant of performance. Among different pricing strategies, marketing managers can choose their preferred type. The overall objective of pricing is to increase sales and profits globally (Kigan, 2001).Global Pricing subject can be fully integrated and considered into the product design process (Kigan, 2001) As the ultimate aim of the industry is to earn profits so pricing of industrial products and services should be based on desire of the customer. A company set the price for the first time for the following items i.e. when a new item is manufactured or a new product comes from normally when an item is directed to a new distribution channel, or it is offered to a new geographic area. Companies need to decide the positions of their product in terms of their quality and price. Literature review Research shows marketing scholars have devoted only little effort to pricing theory and practice. This lack of...
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..."Distribution and Pricing" Please respond to the following: • Discuss the various ways that distribution adds value (or utility) to a product or service, the impact that wholesalers and retailers have on that value, and how it can be used as a competitive advantage. Strictly speaking, although a wholesaler may own or control retail operations, wholesalers do not sell to end customers. Indeed, many wholesale operations are themselves owned by retailers or manufacturers. Wholesalers are extremely important in a variety of industries, including automobiles, grocery products, plumbing supplies, electrical supplies, and raw farm produce. Wholesaling involves that part of the marketing process in which intermediaries, i.e., those between the producer and end consumer, buy and resell goods, making them available to an expanded buyer's market over an expanded geographical market area. As middle agents, wholesalers are only effective when the price they charge for goods and services is less than the value placed by customers. By facilitating the transfer of title of goods, they are involved in the bulking and distributing of goods. (www.referenceforbusiness.com/encyclopedia/Val-Z/Wholesaling.html#ixzz1nOmy6Yk2 ) • As you market yourself to employers, the salary you demand is essentially your personal price. Keeping that in mind, determine the pricing strategy should you follow (penetration, skimming, or competitive). Explain your rationale. In most cases competitive pricing strategy would...
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...Assignment #3 Pricing Strategy and Channel Distribution Marketing Management – MKT 500 February 15, 2012 Pricing Strategy and Channel Distribution Determine and discuss a pricing strategy (Skimming and Penetration). One of the four major elements of the marketing mix is price. Pricing is very important strategic element. The pricing strategies impinge on featuring products, channel decisions, and promotions. This strategy helps marketers set prices. (Pride, Hughes, & Kapoor, 2011) There are many ways to price a product. Two commonly known pricing strategies are skimming and penetration. Lavishness Hair Studio is likely to use one or both of them over a calculated period of time. Price skimming involves charging the highest price possible for a short time where a new, innovative, or much-improved product is launched onto a market. The objective with skimming is to “skim the cream” off customers who are willing to pay more to have the product sooner. Prices are usually lowered once demand falls. Penetration pricing is the opposite; it involves the setting of lower, rather than higher price for a new product. The seller wants to discourage competitors from entering the market by building a large market share quickly. The plan is to raise prices as soon as the introductory offer is over (Pride, Hughes, & Kapoor, 2011). Lavishness Hair Studio will use price penetration during the initial opening phase of the business. Penetration pricing is the strategy...
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...be found in a Rate Tariff Book as payment to a carrier for performing a given transportation service, and is the lawful charge for the service. Under deregulation, price is a more appropriate term applying to what transportation carriers charge for their services; price representing the value of services performed based on prevailing market forces. 2. The theory of contestable markets is offered to identify the relevant market structure for the deregulated transportation environment. Explain the theory. ANS: Explanation is offered for the case of airline deregulation. For deregulation to work, its market structure must closely resemble pure competition. The airline industry appeared to be oligopolistic and would prevent new entrants. Some consensus did exist that the airline industry could perform competitively. This provides the rationale for the theory, which proposes that potential competition be substituted for the active participation of many sellers. For the theory to work, four conditions have to be met: no barrier to market entry, no economics of scale, consumers would be willing to switch quickly among carriers, and existing carriers had to be prevented from responding to new entrants' lower prices. 3. Define and discuss Cost of Service Pricing. ANS: Cost of service pricing takes a marginal-cost approach to pricing. Cost of service pricing can also be analyzed as a total cost or fully allocated cost approach to price setting, where...
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...Intelligent pricing is one of the most important elements of any successful business venture. Yet many entrepreneurs fail to educate themselves adequately about various pricing components and strategies before launching a new business. Smart small business owners will weigh many marketplace factors before setting prices for their goods and services. As the Small Business Administration (SBA) indicated in The Facts About Pricing Your Products and Services, "you must understand your market, distribution costs, and competition. Remember, the marketplace responds rapidly to technological advances and international competition. You must keep abreast of the factors that affect pricing and be ready to adjust quickly." Cost Factors and Pricing There are three primary cost factors that need to be considered by small businesses when determining the prices that they charge for their goods or services. After all, price alone means little if it is not figured within the context of operating costs. A company may be able to command a hefty price for an item, only to find that the various costs of producing and delivering that item eliminate most or all of the profit that it realizes on the sale. It should also be noted that service businesses often find it more difficult to accurately gauge their costs, especially in the realm of employee hours. A freelance copyeditor may find that one 2,500-word article takes twice as long to complete as another article of the same size because of differences...
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...PRICING Price is the amount of money need to pay for using a goods or service, or the sum of the values that customers exchange for the benefits of having or using the goods or service. Price is the major factor affecting buyer choice and still remains one of the most important elements determining firm’s market share and profitability. OBJECTIVES Pricing objectives can be classified into four major group: profitability objectives, volume objectives, meeting competition objectives, and prestige objectives. DiGi company objective is meeting competition objectives because DiGi have to set prices to match industry leaders such as celcom or maxis. DiGi focus on competition in services. DiGi also using value pricing strategy to emphasizing benefits a product provides in comparison to the price and quality levels of competing offerings. STRATEGY The alternatives pricing strategy are skimming pricing strategy, penetration pricing strategy, and competitive pricing strategy. DiGi using competitive pricing strategies. Competitive pricing means pricing that design to deemphasize price as a competitive variable by pricing a goods or services at the general level of comparable offerings. DiGi use this techniques to entice customers purchase services from them. DiGi try to reduce the emphasis on price competition by matching other firms’ prices and concentrating their own marketing efforts on the product, distribution, and promotion elements of the marketing mix. POLICY Pricing policies...
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...value-based pricing and cost-based pricing. Businesses have methods by which to price their products and services. Value-based pricing and cost-based pricing are two common strategies companies use to promote goods and services. Setting the right prices is the key to effective marketing as well as to long-term profitability. Both of these approaches have strengths and weaknesses relative to the other. When a company uses cost-based pricing, the company sets a price at a percentage above the cost it incurs to manufacture the product or to provide the service. Value-based pricing takes a different approach, considering the potential value the product or service will bring to its customers. Value-Based Pricing A value-based pricing company considers the value of its product or service, as opposed to the cost the company incurred to create and produce it. To do this, the company determines how much money or values its product or service will generate for the customer. This value could originate from factors such as increased efficiency, happiness or stability. Companies or individuals that produce medications, chemicals and computer programs and software and artwork often use this pricing strategy. Cost-Based Pricing Cost-based pricing uses manufacturing or production costs as its basis for pricing. The cost-based pricing company uses its costs to find a price floor and a price ceiling. The floor and the ceiling are the minimum and maximum prices for a specific product or service; they...
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...Huntsville Hospital Health System develops pricing strategies within the organization to provide specific services, products, and pharmaceuticals, while covering organizational costs and producing revenue. Healthcare organizations employ prices, one element of the marketing mix, in addition to combining payer mix, service mix, capital demands, and charitable cases for consideration in pricing strategies within a healthcare system (Feldman, 2002). In healthcare, pricing strategies are affected by multiple factors like managed care, pharmaceutical and medical device companies, and in recent years increased government involvement. Pricing must ensure that the Huntsville Hospital Health System covers all it’s financial needs, while cost represents a single component of pricing. Healthcare pricing encompasses charges set by the hospital to not only pay for the cost of an item, but to pay for the staff delivering the product, the electricity, marketing, and other supplies. HHHS provides excellence in providing a...
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...decisions a firm has to make relates to pricing its products or services. If consumers or organizational buyers perceive a price to be too high, they may purchase competitive brands or substitute products, leading to a loss of sales and profits for the firm. If the price is too low, sales might increase, but profitability may suffer. Thus, pricing decisions must be given careful consideration when a firm is introducing a new product or planning a short or long- term price change. Price and Pricing defined Price is the money, good or service exchanged for the ownership or use of a good or service. Examples of various names of price are tuition for education, rent for use of asset, interest for use of money and fare for use of taxi or a bus ride. Pricing may be defined as those activities involved in the determination of the price at which products that will be offered for sale considering the various objectives of the firm. Demand Influences on Pricing Decisions Demand influences on pricing decisions concern primarily the nature of the target market and expected reactions of consumers to a given price or change in price. Three primary considerations are demographic factors, psychological factors and price elasticity. 1. Demographic Factors In the initial selection of the target market that a firm intends to serve, a number of demographic factors are usually considered. Demographic factors that are particularly important for pricing decisions include the following: ...
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...Value-Based Pricing and Cost-Based Pricing Businesses have methods by which to price their products and services. Value-based pricing and cost-based pricing are two common strategies companies use to promote goods and services. Setting the right prices is the key to effective marketing as well as to long-term profitability. Both of these approaches have strengths and weaknesses relative to the other. When a company uses cost-based pricing, the company sets a price at a percentage above the cost it incurs to manufacture the product or to provide the service. Value-based pricing takes a different approach, considering the potential value the product or service will bring to its customers. Value-Based Pricing A value-based pricing company considers the value of its product or service, as opposed to the cost the company incurred to create and produce it. To do this, the company determines how much money or values its product or service will generate for the customer. This value could originate from factors such as increased efficiency, happiness or stability. Companies or individuals that produce medications, chemicals and computer programs and software and artwork often use this pricing strategy. Cost-Based Pricing Cost-based pricing uses manufacturing or production costs as its basis for pricing. The cost-based pricing company uses its costs to find a price floor and a price ceiling. The floor and the ceiling are the minimum and maximum prices for a specific product or service; they...
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...1) Executive Summary This research paper will investigate the benefits of dynamic and fixed pricing and how the different pricing methods are perceived by consumers in the online market. It will examine consumer perceptions and behavior when purchasing various goods and services in an online environment. As well as the trends of increasing dynamic pricing methods on various websites even for goods and services sold at posted prices. 2) Introduction The pricing issue we have chosen to investigate is that of dynamic vs. fixed pricing of products and services on the internet. Prior to the introduction of e-commerce, products and services were distributed through brick-and-mortar stores with fixed prices. However, many online websites are now offering variable pricing methods for the exact same products. Consumers are now able to have much more control over the prices of these online goods and services. With a typical brick-and-mortar store or online store, the price is set by suppliers to meet the average consumers’ willingness to pay, in order to maximize profit. One of the main advantages associated with a set retail price is reliability. Consumers can make a decision to purchase the product at the current price, and they have a sense of security that the product will be available at the set price. With the introduction of e-commerce suppliers are now able to sell their products to much larger markets across the world and are no longer restricted by geographical...
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...Home » marketing concepts » Pricing Pricing In the narrowest sense, price is the amount of money charged for a product or service. More broadly, price is the sum of all the values that consumers exchange for the benefits of having or using the product or service. PRICE – The amt of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service. “One can define price as that which people have to forego in order to acquire a product or service.” What does a buyer think? To a buyer, price is the value placed on what is exchanged. Something of value – usually purchasing power – is exchanged for satisfaction or utility. Purchasing power depends on a buyer’s income, credit, and wealth. Buyers’ concern about price is related to their expectations about the satisfaction or utility associated with a product. Buyers must decide whether the utility gained in an exchange is worth the purchasing power sacrificed. Different terms can be used to describe price for different forms of exchange, (rent, premium, toll, retainer, fee, interest, etc.). Historically, price has been the major factor affecting buyer choice. This is still true in poorer nations, among poorer groups and with commodity products. However, non-price factors have become more important in buyer-choice behavior in recent decades. Price is also one of the most flexible elements of the marketing mix. Do you agree ? Unlike product features...
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...Transfer pricing By John C. Hollas Illustration: Susanna Denti How to apply the appropriate transfer pricing methods to intercompany financial transactions In Canada, taxpayers are seeing an increased scrutiny of and more audit focus on intercompany financing transactions by the international tax auditors from the Canada Revenue Agency. The related party financial transaction being most commonly audited by the CRA are intercompany loans, factoring of trade receivables and provision of financial guarantees. This environment of rising transfer pricing controversy risk with respect to intercompany financial transactions conflicts directly with the multinational corporation's (MNC) increasing need to finance its foreign operations through intercompany, crossborder financial transactions. The transfer pricing risks and implications remain very significant both from a tax compliance standpoint and from a controversy risk management perspective. Today, MNCs need to mitigate the risk of significant transfer pricing adjustments by local and foreign tax authorities. While our focus is limited to the Canadian tax environment, it is critical to recognize that in all international related party transactions, with financial transactions being no exception, the transfer pricing issues include the other tax jurisdictions of the foreign related parties that are involved in the intercompany transaction. As such the transfer pricing legislation in those foreign tax jurisdictions must...
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...Pricing Strategy: Ecaterina Curova Jason Geesey LCC International University November 13th, 2013 Pricing Strategy: Pricing is the moment of truth; it is when all of the company’s marketing and financing strategies really meet the final decision point with its customers (Kotler & Armstrong, 2012, p.314-315). “One of the key aspects of getting the financial control of the business is developing a pricing strategy for its particular market so the product or service can be sold properly” (“Developing a Pricing Strategy for Your Business,” 2010). If a company has a good pricing strategy for the financial basis and a good marketing strategy than it is very easy to sell the product (“Developing a Pricing Strategy for Your Business,” 2010). There are two ways of pricing the product or service in the market: value-based pricing and cost-based pricing. Value-based pricing is looking on how customers value the product and is basing the price on that (Kotler & Armstrong, 2012, p.315). If a medical engineer has a pill that costs him a dollar to make, however, it can cure cancer, customers are going to pay him a lot more money than one dollar for it. Businesses look at what value people put on their product and price it accordingly. On other side there is a cost-based pricing which looks at how much money a company has to spend to make their product and bases its cost on that (Kotler & Armstrong, 2012, p.319). There are a lot of different pricing strategies that are connected...
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