Pricing - Essay Example

Comments (1) Cite this document
Summary
The intention of this study is pricing as the process of setting what an organisation will obtain in exchange for its products or services. Pricing plays the key role in determining the profitability and sustainability of a business firm. …
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.8% of users find it useful
Pricing
Read TextPreview

Extract of sample "Pricing"

Download file to see previous pages Center of discussion in this paper is pricing that can be approached at three distinct levels such as industry level, market level, and transaction level. Industry level pricing process considers overall economics of the industry including changes in customer needs and supplier prices. Zuponcic states that Market level pricing takes into account market trends and competitors’ strategies; whereas, transaction level pricing specifically focuses on the discounts management. Modern marketers practice a range of pricing strategies mainly including cost plus pricing, skimming pricing, market oriented pricing, penetration pricing, premium pricing, price leadership, target pricing, absorption pricing, and value based pricing. A set of economic factors is to be considered before recommending a pricing strategy for a particular product since pricing is the most effective profit lever. As Sloman points out, it is necessary to evaluate market demand and price elasticity of the product. For instance, if there is high market demand for a product, the marketer can fix a relatively higher price whereas he will be forced to lower product prices when market demand declines. Some products including jewelleries and automobiles are very sensitive to price; and hence, even a small increase in price will lead to a noticeable decline in their market demand. As Clausen indicates, economic theories do not encourage the setting of higher prices for such price sensitive products. In addition, production costs and expected profit margin have to be analyzed while choosing a pricing strategy....
In addition, production costs and expected profit margin have to be analyzed while choosing a pricing strategy (ibid). When a product’s cost of production is high, firms generally charge higher prices in order to ensure adequate return on the huge investments. In the view of Senior (1852, p. 102), organizations need to consider huge profit margins if the cost production is high and fix a low profit margin if production costs incurred are near to the ground. Shaw (2001, pp.58-59) points out that market structure also plays a crucial role in ensuring successful pricing since market demand is the key driver behind product movement. To illustrate, a skimming pricing policy would probably fail to attract customers in a market where competition is intense, because a set of other product choices are available to customers. Therefore, it is better to adopt a cost plus pricing policy or penetration pricing policy while operating in a highly competitive market environment. Similarly, price discrimination strategy would be advisable in a market which contains diverse population. This strategy seems to be potential for mobile phone industry, particularly to Aslan. According to George, Joll, and Lynk (1992, pp.181-185), in an oligopolistic market environment, a small number of sellers dominate the market; and hence economic theories advise firms to compete in such market segments with relatively low prices and high production. If a marketer increases his product prices in an oligopolistic market environment, customers will certainly switch their demand to other sellers who market their products more affordably. Marketers must give specific focus on the pricing of simple configurable products. Economic approaches direct that price ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Pricing Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
Retrieved from https://studentshare.org/management/1394253-pricing
(Pricing Essay Example | Topics and Well Written Essays - 1250 Words)
https://studentshare.org/management/1394253-pricing.
“Pricing Essay Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/management/1394253-pricing.
  • Cited: 0 times
Comments (1)
Click to create a comment or rate a document
tu
turnerraul added comment 9 months ago
Student rated this paper as
This document saved me today. I liked the style. It was very useful for my management course.

CHECK THESE SAMPLES OF Pricing

Pricing

...Task: Pricing I should adopt skimming strategy so that the price set at last becomes acceptable and beneficial on a two way dimension. The advantages and disadvantages that come along with price setting methods must be put into consideration. The choice of a pricing method to be adopted largely depends on the nature of the product and the targeted market structure and composition. The available methods include the cost based method which involves the price determination based on the cost of production. In this method, the values of all the inputs applied when developing the product are summed. The other method is the value based method. This focuses on...
4 Pages(1000 words)Essay

Is the Death Penalty Applied Fairly

4 Pages(1000 words)Essay

Pricing

...Pricing When pricing a product, many factors need to be put into consideration. Largely, the entire perception regarding the company’s business mostly revolve around the first price. Value adding techniques are better used while determining the price to charge on a particular product than opting for deep discounts. Pricing is even more important when introducing cutting edge technology or products. This paper discusses the most appropriate pricing option available for Whirlpool. As the product manager for Whirlpool’s line of washing machines, skimming would be the best pricing method to choose when...
3 Pages(750 words)Research Paper

Pricing Strategy

...? Restaurant Pricing Strategy inserts his/her s Question The mission of the upscale Chinese restaurant is to deliverpremium quality food to our customers whom we regard as patrons. Our fine dining experience and exclusive ambience express the highest level of hospitality and service to our customers. Only the freshest products make it to our kitchen- we do not believe in selling anything below our premium standards. Question 2 Organizations usually have a choice between cost-centric, demand-centric and competition oriented pricing strategy (Levy & Weitz, 2012). As opposed to the conventional practice of setting prices to cover costs in the restaurant industry, this upscale Chinese...
6 Pages(1500 words)Essay

Pricing Strategies

...PRICING THE ZC GEMSTONE: STRATEGY ANALYSIS February 4, 2007 Pricing the ZC Gemstone: Strategy Analysis Pricing is a major component of the 4Ps and is an essential element of any marketing strategy. Setting the price too high can lose sales and market appeal. Setting the price too low can erode profits and drive a product out of the market. The ZC gemstone is presented with a unique situation in which the product has not been offered to the buyers before. Using a comparison to similar items and trying to insure that the product can stay on the market results in 2 strategies that are the most appropriate. Competition-based and perceived-value...
3 Pages(750 words)Essay

Pricing

...Pricing Table of Contents Importance of Pricing 3 Factors influencing price 4 Distribution 7 References 8 Bibliography 10 Importance of Pricing According to John Andrew Davis, “price is the monetary value associated with the product and it is the driver of company revenues.” (Davis, 2009). Charles W. Lamb, Joseph F. Hair and Carl McDaniel believe that price is something “which is given up in an exchange to acquire a good or service.” (Lamb, Hair, & McDaniel, 2007). Price of a product or service is very important to both seller and customer. Usually customers see price as the cost of product or service,...
5 Pages(1250 words)Research Paper

Pricing

...Introduction: Pricing is an important factor in any business and it is this aspect that brings the product and its s together. There are different kinds of pricing for a company and the pricing strategy varies from a start up company and an established company. Pricing strategy is the task of the top management with the help of middle level and low level management. This is done by analyzing the local and the international market, clear method of analyzing the conditions where a successful marketing can be carried out. Pricing is the process of influential decision making on the benefits the company will earn on its business. Pricing...
6 Pages(1500 words)Research Paper

Assets pricing

...ASSETS PRICING goes here] [Your goes here] [Due the paper] Question Part a) Bootstrap methodology is usually used toexplicitly separate the factors of skill and luck while assessing the performance of mutual funds. Bootstrap method has become an efficient technique to make statistical inferences and examining the performance of mutual funds is one of the main processes that require the use of modern computer power to do complicated statistical calculations. The main advantages of using this methodology include assistance in doing accurate statistical analysis and assistance in complex financial calculations. The performance of mutual funds in UK and US is somewhat different. In the US, the performance of mutual funds that...
4 Pages(1000 words)Essay

Services/Pricing

...Services/Pricing Services/Pricing It is essential for organizations to provide support services to their s. The services will not only improve the relationship between these two parties, but also boost customer loyalty. Many customers changed their preferences after it was claimed that Dasani water was not pure distilled water, but tap water. Consequently, it is necessary for Coca-Cola Company to put initiate support services to the buyers of Dasani water in an attempt to improve customer confidence. The approach focuses on challenges and adding value to the brand. Buyers of Dasani water need to closely relate with the producer to generate a common benefit. This would ensure that they receive assistance...
2 Pages(500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Pricing for FREE!

Contact Us