Elements of pricing in marketing - Assignment Example

People make choices of different products and these choices are often resolved by the free play of market forces, and in this case it can be said that the resources are allocated through the price mechanism. This means that the individuals as consumers freely choose which goods and services they can purchase and the producers on the other hand freely decide which goods and services they will provide (Harrison, 1986). In short, the price mechanism plays a significant role in influencing the consumers to purchase a product. As such, this paper seeks to explain the mechanisms that can be implemented in order to get the customers pay more for a product. Reference will be made to a cooling device for removing heat from subcutaneous lipid-rich cells US 8337539 B2. The paper will also explain the strategy that can be implemented in order to raise the price of the product successfully. Statistics have indicated that excessive fat deposits in the body are detrimental to health since they increase the chances of developing diseases such as heart disease, high blood pressure, osteoarthrosis, bronchitis, hypertension, diabetes, deep-vein thrombosis, pulmonary emboli, varicose veins, gallstones, hernias, and several other conditions (Patents, 2015).Other methods such as liposuction have proved to be less effective in dealing with the problem which has resulted in the development of a new product. This cooling device has two cooling elements rotatable relative to each other and has proved to be very effective and can provide a lasting solution to the above mentioned problem. According to this background information, it can be noted that there are quite numerous reasons why the price of this product can be reviewed upwards and it continues to attract more customers. There are many factors that influence the behaviour of the consumers towards a certain product even if it has a higher price compared to other similar products offered in the market. There is a close relationship between the price of a product and its demand. Under normal circumstances, “demand and price are inversely related; that is the higher the price, the lower the demand,” (Kotler & Armstrong, 2010, p. 317). However, in the case of prestige goods such as the cooling device mentioned above, it can be seen that the demand curve at times slope upwards. The main reason is that the consumers often think that higher prices mean more quality (Kotler & Armstrong, 2010). A product that is associated with high quality is often associated with high prices. In this case, it can be noted that it becomes relatively easy for the company to successfully raise the price of the product. There are some customers who are prepared to pay premium prices for a certain product as long as they are assured of getting the quality they will be looking for. Quality plays a pivotal role in determining the price of a particular product. However, aggressive marketing strategies need to be implemented in order to convince the consumers that the product has great quality. It also becomes easy for the consumers to associate quality of a product with high price. Thus, quality is closely linked to customer satisfaction. Customers can also pay more for a product if it is valuable to them. Customers often face a large number of product and services of which they can choose and more often than not, the customers buy from the firms that offer highest customer perceived value. According to Strydom (2004), customer perceived value refers to the way a customer evaluates the difference between the benefits and costs of the product compared to the other market offerings by the competitors. A valuable product to the customers is likely to have a higher price compared to other similar market offerings. The price of the cooling device mentioned above can be increased successfully as a result of the fact that it is valuable to the health of people who have problems of high fat deposits in their bodies. In other words, this is a live saving device and it can attract a high price as a result of the fact that there are many benefits that can be derived from using the gadget. Customer satisfaction is likely to increase if the perceived value of the product by the customers is high. The customers can even influence others to purchase the product if they are satisfied by the perceived value of the product offered in the market. In the same vein, it can be seen that the differentiation strategy can help the company to increase the price of the product and continue to attract customers. This is related to differentiating the market offering to create superior customer value (Kotler & Armstrong, 2010). This goes hand in hand with the aspect of uniqueness of a product offered in the market. In most cases, a product that has unique features is likely to appeal to the interests of the customers. This product can be hardly matched by the other products offered in the market which gives the marketers the opportunity to increase the price while at the same time retaining the consumers. Loyalty among the customers is likely to be created if they perceive a certain market offering as unique and of superior value. The prices can be reviewed upwards but the customers will remain loyal to the company by virtue of the fact that they are satisfied by the value they obtain from the product. Thus, differentiation strategy is very effective in as far as creation of customer loyalty is concerned. Over and above, it can be seen that there are quite a number of market forces that determine the price of a particular market offering. Whilst it is widely believed that the price of the product and its demand are inversely related, it can be seen that in some instances, higher prices of a product can also lead to higher demand of the same as a result of different reasons. From the discussion above, it has been observed that it is possible to successfully raise the price of the product and the customers continue buying it. Factors such as product quality, customer perceived value of the product as well as uniqueness of a product can make it possible to successfully raise the price of the product. In most cases, the customers are primarily concerned about the benefits they will derive from using a particular product. In some cases, the consumers associate high quality of a product with high price. The customers will still purchase the product even if its price is high. References Harrison, B. (1986). Economics. London: Longman. Kotler, P. & Armstrong, G. (2010). Principles of marketing. CT:JUTA. Patents 92015). “Cooling device for removing heat from subcutaneous lipid-rich cells US 8337539 B2.” Retrieved from: http://www.google.com/patents/US8337539 Strydom, J. (2004). Marketing. CT: JUTA. Read More