Pricing Strategy and Tactics of Thomson Holidays - Essay Example

PRICING STRATEGY AND TACTICS OF THOMSON HOLIDAYS Insert Insert Pricing strategy refers to activities that are pursued at finding an optimum price for a product including overall objectives of marketing, demand for consumers, attributes for the products, economic and market trends, and competitors pricing. A business can employ various pricing strategies when offering a service and selling its products. The price can be established for profit maximization for services offered and for every unit sold or from the overall market. Pricing strategy can be employed to protect a market that already exists from new entrants, to proliferate market share to move into a new market. Pricing tactics establishes the way a company captures value. Tactics comprise the development of tools that dynamically change to respond to changes constantly capture value and revenue gain (Armstrong, 2004). Different pricing strategies accommodate various objectives at different times. Instead of using a single pricing strategy, the company uses a variety of pricing strategy to accommodate the changing goals and needs of the company and to react to competitors changes. Thomson Holidays benefits from reducing or increasing prices subject to the requirements and customers behaviors and clients in their market. It is important for Thomson Holidays to obtain the right pricing strategy to run their business successfully (Blythe, 2013). Thomson Holiday has employed pricing strategy to set prices for its services and products basing on product cost, competitors pricing, and customer pricing. Under competitor and customer pricing strategy, Thomson Holiday has been able to increase their market. The company is aware that competitor and customer pricing strategy are of great importance to them. Customers always consider factors such as cheap price, offer, and availability of discount. For this reason, Thomson Holiday is aware and understands what their customers require and wants. Therefore, the company understands that if price volume is high, the volume of sales will reduce and when price volume decreases, sales volume will increase. Competitor is one of the substantial strategies for Thomson Holiday (Mason, 2008). It has to ensure that the prices for its services and products have to be similar with the competitor’s or market price for similar products and services since the market is very competitive. In this regard, Thomson Holiday has to be creative about competitor marketing strategy otherwise; it might lose its business. Another pricing strategy that is employed by Thomson Holiday is the use of the promotional mix, which is important in the strategy of the marketing mix. A company that develops products and services has to conduct a promotion through advertisement known as promotional mix. Once products are fully developed by the company, its prices are established. To create demand for the developed products, they perform promotional activities. In this case, Thomson Holiday makes use of elements to promote its products and services. Advertisement is one of the main elements of promotion that Thomson Holiday has used to promote its services and products (Wilman, 2010). The weight for advertisement of Products and services has been increased through, daily newspaper, television radio, magazine, billboard, social network, and cinema. Another element that Thomson Holiday has used to promote its products is personal selling. It means that sales are made to customers directly or by telephone for instance, sales meetings, sales training, sales presentations, and program incentives for salespeople. Besides, when customers book holidays, they usually make calls to the company. Thomson Holiday also uses sales promotion as an element for promoting its products and services. Sales promotion has been achieved through media and non-media communications. Examples include contests, product samples, trade shows, self-liquidating premiums, coupons, sweepstakes and exhibitions. Sales promotion targeted at consumers includes free places for children, discounts that are special for bookings received by a certain date. Thomson Holiday public relation has enabled the company to make relation with the public (Klaus, 2010). Public relation has helped the company’s product and services to be known to the public hence promoting the company products and services effectively. The company has plans to make public relation through press conference, exhibition, press release, corporate logo, and sponsorship. Another element for the promotion is through direct marketing. It means that marketing is done to customers directly. Thomson Holiday has practiced direct marketing through sending vouchers to customers, e-mail, telephone conversation, sending leaflet to the customers at their homes. The company has relation management hence the reason why they have customers e-mail addresses, telephone numbers, and including their home addresses (Dibb S., 2012). For this reason, Thomson Holiday they successfully conduct direct marketing with customers. In addition, high-low pricing is another form of pricing strategy that Thomson Holiday makes use. High-low pricing strategy is a pricing method that Thomson Holiday offers its services and goods at a price that is higher than a competitor’s price for similar products and services. Thomson Holiday achieved this pricing strategy through conducting advertisements, promotions, coupons, offering key products and services at a lower price (Blythe, 2013). The low price promotion is intended to fetch more customers to the company. The company also adopts market-oriented pricing strategy based on research and analysis from target market. They have established prices for their products and services subject to the results obtained from the research. For example, when competitors set prices for their products as well as services are at a lower price, Thomson Holiday responded by offering higher prices that is above or below the competitor’s price. It relies on what their set goals for the year and need to attain them (Blythe, 2013). The company can also employ premium-pricing strategy by offering their services and products at a price that is high to encourage favorable point of view among customers. The strategy is aimed to utilize the tendency for customers to assume that expensive products and services enjoy unique reputation, are more desirable, are more reliable, and have exceptional quality. Thomson Holiday has adopted product oriented pricing since the relationship for certain products enables the company to change its pricing strategy. Adding extras that are optional such as selling products in bundles, airline charges for additional baggage, enables the company to hide the actual costs from its customers (Marlene, 2012). The company did put into consideration promotional pricing for incidence; they offered a buy one and get one for free campaign to attract customers to their products with an aim that they will endure buying even after the end of the promotion. The management of revenue had concern with how to price products and services. Thomson Holiday offered discount on their products and services, which has enabled the company, increase the volume. Through price reduction on products, the company managed to overcome weak demand and gain share of the market, which will lead to realization of increased revenue. In cases where they experienced demand becoming stronger for products and services, but threat of cancelation reveals for instance, hotel rooms and airline seats, the company frequently overlooked such to maximize revenue (Mason, 2008). The company uses the cost-plus pricing strategy. In this case, the company took the cost of producing services and products then added the amount that it requires to make a profit and made the right implementation based on the data. The strategy was suitable for Thomson Holiday since it is a large company that operates in markets volatile UK market that is dominated by price competition. Thomson uses pricing tactics in marketing their services and products. Hence, pricing tactics can enable the company to attract customers and to achieve profit maximization. One of the pricing tactics made use of is offering discounts to reduce prices for services and products. It is one of the powerful tools they use to sell old stock in the company. The company can also use odd value pricing tactic to attract customers. For instance, the company offers a simple evening dinner at $9.9 instead of $10. Customers view prices of odd value like this as attracting and the hotel attracts many customers because of the strategy (Colin Michael Hall, 2009). Hence, pricing is an important part when customers are making decisions of buying products and services. Skimming is also another form of pricing tactics that Thomson Holiday adopted and is making use of it for the better part of their lifetime. By offering services and products that are unique, it has managed to achieve customers by offering this services and product to them at a high price. The company can also achieve high prices by introducing products and services that are new at a high price and make old services and products cheaper (Armstrong, 2004). Otherwise, the company can price it self out of the market when there is stiff competition. Thomson Holiday markets its products and services through pricing theories. Pricing theory is can be categorized into cost based, demand based, and competition based. Under cost-based pricing theory, Thomson determines their prices for its products and services based on cost of production and the profit that the company targets without putting demand into consideration. In demand-based pricing theory, the company set prices on products and services basing on the research on customers. It has enabled the company to analyze price range that is acceptable and the company performs an evaluation on cost and profit they require in a given period of time and to a required range (Dibb, 2012). Subject to loyalty of the customer and brand differences, the company offers services and products at, below or above the market price. Thomson Holiday has large attractions that are well managed, and it is an accommodation business, a transportation company and it is internationally reached. The company is increasing marketing and assembling their packages to enhance maximization of their high fixed cost assets and obtain a cost advantage in marketing. The various packages offered by Thomson are aimed at solving inherent inefficiencies that are natural in matching supply and demand, particularly in the sector of leisure. All are intended to achieve customer choice and convenience and to enhance rates maximization for capacity that is available that would not be offered. Therefore, pricing enabled the company to develop and maintain quality image for its products and services. Products that are highly priced relate to products that are of high quality and products with low prices are of the category of bargaining quality. Market research and analyzing competitors will help the company to know the level of service customers expect at their price point. The employment of the various pricing strategies by Thomson Holiday will enable then to maintain their existing customers and to attract new customers to into the company. The pricing strategies employed have enabled the company to overcome its competitors. List of References Armstrong, G., 2004. Principles of marketing. New Jersey: prentice hall. Burns, A.C..&.B.R.F., 2013. Marketing research. New Jersey: Prentice-Hall. Colin Michael Hall, A.A.L., 2009. Understanding and Managing Tourism Impacts. New York: Routledge. Dibb S., S.l..P.W.M.a.F.O.C., 2012. Marketing Concepts and Strategies. 6th ed. New York: Prentice-Hall. J., B., 2013. Principles and Practice of Marketing. London: Adventure Works Press. Klaus, G., 2010. Marketing Parameters and Their influence on Consumer Food Choice. The Psychology of Food Choice, pp.161-74. Marlene, K., 2012. Advertising and Consumerism in the Food Industry. Johnson & Wales University, pp.1-38. Mason, P., 2008. Tourism Impacts, Planning and Management. New York: Taylor & Francis. Talwar, P., 2006. Hotel and Hospitality Management. New York: Oxford University Press. Wilman, W., 2010. Perceptions on the use of pricing strategies to stimulate healthy eating among residents of deprived neighborhoods. The International Journal of behavioral Nutrition and Physical Activity, pp.1-10. Read More