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Marketing concept - Essay Example

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Formulation and implementation of marketing strategies highly rely on price. Pricing strategies therefore directly influence marketing strategies. By setting a given level of price, a company…
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Pricing Strategies Marketing strategies are evaluated and adopted based on the pricing model of the firm. Formulation and implementation of marketing strategies highly rely on price. Pricing strategies therefore directly influence marketing strategies. By setting a given level of price, a company aims at achieving specific goals and objectives. However, pricing strategies are not necessarily mutually exclusive (Drummond & Ensor 163). Each single pricing strategy adopted by a given firm or company is directly linked to a marketing strategy. In this regard, consistency is a fundamental factor that the company should put into consideration in dealing with pricing and marketing strategies. Distributional and promotional aspects should also be accounted for in pricing such that the end result of the process is consistent with all the variables in the company’s interests.
The primary purpose of pricing strategies is to specify the role of price in the implementation of marketing strategies (Drummond & Ensor 180). The aim of any given company in business is to market its products in order to gather a sufficient market share, thereby enhancing its profitability and a diversified portfolio. In this regard, the applicability of pricing strategies at an individual level cannot be refuted. Pricing strategies in the marketing context have constituted my personal experiences in two ways. These ways relate to the actions engaged by companies and firms in a bid to satisfy their customers and remain profitable at the same time.
One of such personal experiences in the context of pricing strategies relates to penetration pricing. A company undertakes such a move in order to stimulate demand for its products. This is done by offering the consumer or the buyer a low price, such that the buyer feels favored and therefore compelled to make purchases. Rational buyers seek to maximize their welfare, and do I, given the interests of the company. When a product whose quality is not compromised is provided at a cheaper price, its demand rises. I have made several purchases under this notion, thus the applicability of penetration pricing in several transactions that I engage in.
Another pricing strategy that relates to my personal experience is that of premium pricing. This factor is based on the competitive nature of firms. Firm compete for the market share in order to reap the highest benefits at the minimum cost possible. Competition may necessitate that a firm set its price higher than the competitive price. However, this is only possible when the quality of products offered by this firm is higher than that of the rival firms. I have made purchases of high quality products, paying more for the products in relation to the price charged by other firms which offer the same products. This practice is enhanced by the ability of a firm to differentiate its products from those of other competitors based on quality. The outstanding quality allows a high-quality buyer to easily differentiate among qualities, hence the willingness to pay more given the tastes and preferences of the buyer.
On the same note, I have experienced premium pricing in the context of a monopoly. Monopoly operations constitute substantial barriers for competitors to enter the market. The monopoly therefore dictates the price it charges for the products offered in the market. Barriers to entry into the market makes the buyers price takers. A buyer will buy the monopoly products at the price level set by that monopoly. The fewer the sellers in the market, the higher the price charged. In the monopoly case, product quality may not be of primary focus. The idea behind premium pricing is based on the ability of the monopoly to limit the amount of product produced as well as that supplied in the market. Market demand may not equal market supply, thus the rationale behind premium pricing in the monopoly context.
Work Cited
Drummond, Graeme & Ensor, John. Introduction to marketing concepts. California:
Elsevier/Butterworth Heinemann, 2005. Read More
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