Price is a really powerful tool for the marketing manager. Good marketing practice suggests that clarity is the key and that all of the marketing tools must be integrated. It is affected by a whole range of factors, these can be summarised as internal and external factors. To begin consider the external environment or the world of the business. The position in the market is critical. For example are you offering a volume product and trying to sell as many as possible. Think about bread, a humble everyday product, or is it? If you are pricing the sliced white loaf, sold by the thousands on a daily basis it is price sensitive. If you decide to bake small quantities of wholemeal, specially baked in a local bakery twice each day. There would be an endless choice of flavours.
The difference is what marketers refer to a positioning. Be very clear about your choice of target customer. Are they a specialist buyer or a price sensitive buyer? Every market you chose has a range of price points. Whether it is food, hi fi systems, holidays, cars, the list is endless. Once the target customer is set it gets a little easier as the long term aspect of price is determined. The next stage is to think about the shorter term tactics. The stage of the product in its lifecyle is a useful background. If you are launching the new mobile phone it will be priced at the top of the market, if is a marketing following phone it will be more sensitive to price. Once the new phone is launched the prices will then fall. That is usually due to the competitors entering the market and also by gaining economies of scale.
Price
The accountants will be looking for pay back and to show how quickly the business can recoup its investment. They will need to cover the costs to ensure that the product will make profit. The marketers now aim to increase the sales from launch and feed the product into the market as quickly as possible. From there it needs to hold sales steady for as long as possible. By then it will be making cash and that will be reinvested into the product pipeline. The manipulation of price can be seen every day. This can be in response to the competitors, or to sell off unwanted stock. Price can be increased to make a product more desirable especially if the brand is strong. The marketer will also look at loss leaders and see a range of products as a family. The promotion of an unmissable offer as the base, and then to make profit on the other products.
Hope that is useful.
A Marketer's View of Setting Price Price
0 comments:
Post a Comment