Customer Relationship Measurement – Meaning, its need and importance
Customers are the most important part of business. There cannot be any business without them. Only satisfied customers will be interested in buying and they will also refer other customers to buy. By measuring customer satisfaction a supplier can maintain a quality and long term relationship with customers and secure their future business and financial […]
What is Competitive Advantage in the Field of Strategic Management?
What is Competitive Advantage? It is a truism that strategic management is all about gaining and maintaining competitive advantage. The term can be defined to mean “anything that a firm does especially well when compared with rival firms”. Note the emphasis on comparison with rival firms as competitive advantage is all about how best to […]
Organizations and Relationship Marketing
Traditionally with Organizations the customers belonged to and were the responsibility of the Marketing Department alone. Organizations probably had too many constraints on meeting the demands and were saddled with limited product range that did not require them to look out and reach out to the Customer. However with evolution of technology, mass production processes […]
Leadership through Product Innovation
Product leadership and growth of the Organization goes hand in hand. Organizations employ certain chosen core value propositions with their product or service and use the same as the key drivers to endear customers and forge relationships. When they stand apart from the rest of the competition by way of superior value that they provide […]
Growth of B2B Exchanges
Decades ago the introduction of MRP and ERP system revolutionized the concept of manufacturing across all industries. All aspects of business including procurement, production, inventory management, logistics, sales and marketing as well as finance were touched or rather integrated by the ERP systems. ERP systems aligned all business functions into a seamless process and the […]
Marketing mix for companies comprises of 4 Ps Product, Price, Place and Promotion. Price is directly related to bottom-line of any business. Profitability of product is required for future operation of the company. Price strategy should communicate to the customer the value company is providing.
There is in-numerable price related challenges in the market for companies. Furthermore, with the advent of internet customer awareness for pricing information has improved. Sites like Priceline and eBay are encouraging customer to name their price for products as well as services.
Pricing strategy is dynamic in nature and should reflect changing condition in competition as well as the market. Overall price strategies follow six step model:
Companies need to plot the demand curve with respect to price as to understand price sensitivity. This demand curve can be estimated using statistical methods by analyzing historical data or by perform price related experiments to understand what customers are willing to pay or through market research and putting the question directly to the customer.
Generally, it is observed that production level increase cost per unit decreases owing to the learning curve effect which comes through experience. Activity based costing is getting in prominence as to allocate the cost properly which helps in estimation profit correctly.
Another way of cost setting is through the target costing, made famous by Japanese companies. In target costing companies set price and profit level. After which they concentrate on cost as to maintain the profit level.
Perceived value pricing method talks about setting price based on the perceived value in consumer price and companies ability to deliver that value.
In value pricing method, companies charge lower price for high quality product from loyal customers. This method is usually seen in the super market. Auction type pricing, going rate pricing and group pricing are other pricing methods.
Pricing should adapt to factors like geographical location, market segment and economic conditions. Companies should remain flexible towards pricing policy and change as per market dynamics. Companies should also not react blindly to price change by competition rather should focus on analyzing the underlying motives.
Your email address will not be published. Required fields are marked *
