Marketing Mix - Price and Pricing Strategies

In our earlier post we talked about the importance of having a very good product strategy and the importance of thinking about a number of product decisions.  But it is not just about having a good product, that product needs to be priced correctly,  correctly means, is the pricing strategies suitable for the target market it is aimed at?

Now lets talk about pricing and the different types of pricing strategies in more detail. Before deciding on a price a firm must firstly:

1. Calculate the cost of making the product.
2. They must also decide on how much customers are willing to pay.
3. Look at competitors pricing and finally
4. The firms overall objectives, that is what does the firm wish to achieve, market share, brand loyalty, awareness?

All of these factors need to be considered before deciding on a  price.  There are a number of pricing strategies a firm may select that may help them with their objectives.

Pricing Strategies

Penetration Pricing

Simply, a firm enters the market with a low price, the aim is to gain market share over the long term

Skimming Pricing

A firm starts of with setting a high price and then over a period of the products lift span lowers the price in  stages.

Phycological pricing

This pricing strategy is all about trying to make the customer believe that there is a physcological gap between one price point and another. An example will be where the firm charges £99 or a product rather then £100, or  $149 instead of $150. Although only a pound or dollar difference the consumer will 'feel' phycologically that the price is greater. This pricing strategy also allows the firm to claim in their advertisment that the product is below £100 pounds or below $150 dollars.

Product Line Pricing

If a firm sells a range of different products they will charge different prices for these products based on their features. For example. Nokia sell a variety of different mobile phones. They will charge different prices based on the features and benefit of each model.

Cost Plus Pricing

A fairly simple and straight forward pricing strategy where the firm decides on a percentage mark up as profit.  For example if it costs £200 to produce a games console, the firm may decide on a 50% profit margin and will then charge £300, the £100 being their profit.

Premuim Pricing

The firm delibrately sets a high price to reflect the exlusiveness of the product. This pricing strategy has to be supported by a very good product strategy. If customers feel that they are not getting value for the premium price, then it may have an impact on the firms overall image.

For more information please look at www.learnmarketing.net/marketingmix.htm

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The Marketing Mix Part One

So you want to know everything about the marketing mix and more?  Well lets start!.

The marketing mix is a common term used in marketing. It is used to describe  four strategies, known as the four P's.  These P's are as follows...

• Product
• Price
• Place
• Promotion

So the first thing you need to know is that the marketing mix can also be called the four P's.

All firms need to carefully manage their marketing mix if they are to be successful.  Let us start off by looking at how a firm should manage their product strategy.

Marketing Mix : Product Strategy

So what is a product? Well it is something you can  touch, so its tangible. You can acquire it, feel it and consume it. From a firms perspective, a consumer will not consume their product unless they add some added benefit to it  and this benefit offers a unique selling point (USP) over any competitor.

Branding

All firms need to think about how they will brand their product. The brand name needs to be unique and may have some form of meaning that brings customers closer to it.

Features

Firms also need to think about the features they will add to their product, again these features maybe what makes their product stand out from the crowd, something they can shout about that makes them unique.

Quality

The product quality is also important. The product needs to be built well and be durable and it must do what it says. If a product does not perform well, this has an impact on the brand name and the image the firm is trying to create. As you can see the quality aspect of a firms product strategy is extremely important.

Design

Design is another important factor that needs to be taken into account. The design of the product will help the product stand out from the crowd, the design can also be functional and help with the performance of the product.  Many companies like Apple and Dyson use design as a tool to help them differentiate themselves from their competitors.

Packaging

I will also touch on packaging but expand on this later. The packaging of the product has to be carefully thought out. If the product is sitting on a shop shelf , the packaging of the product needs to stand out from competitors. A firm needs to think about the size, the colour and the functionality of the product.

After Sales and Warranty

Finally, a firm needs to think about the after sales service and warranty they will offer on the product.  This again could help them differentiate themselves from their competitors. Computer companies may offer onsite service if the product goes wrong, car manufacturers may offer an extended warranty on their cars rather then the industry norm because they are that confident with their product.

So as you can see, when a firm thinks about the marketing mix and their product strategy they need to think about a number of different aspect  that will help them differentiate themselves from their competitors.

For more information, please visit www.learnmarketing.net/marketingmix.htm