developing a marketing strategy episode 4

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PRICE

 In setting a price  for your product,  you  must consider  competition  in  the  target  market,  and the  cost  of  the  total marketing mix.  You  must also  estimate  customer reaction  to possible prices. 

Furthermore, you also should know current competitor practices such  as markups, discounts, and  other terms  of sale. You  must be aware of  legal restrictions on pricing.  If customers won't accept  the price,  all your planning effort will be wasted.

 Consider what  the customer  is willing to  pay and  what  the customer is  likely to expect  for that  price.   Ask yourself whether  the  customer feel  that  he/she is getting  value for money  at that  price?  Remember
 it  is  the  customer's perception  of  value for  money that  counts,  not yours. 

You must  set  the price high  enough  to  cover costs and  earn  a reasonable profit, but low enough to  attract customers and generate adequate  sales volume. The  right price  today may  be completely  inappropriate tomorrow.   The reason for this:  Ever  changing  market conditions. 

For many small business  people non-price competition  -  focusing on factors other  than price  - is a more effective strategy than  trying to  beat  larger  competitors in  a price war.  Nonprice  competition factors are: free trial  offers, free delivery, lengthy warranties,  money-back guarantees, allowing for bargaining, stressing durability, quality, reputation, or special features. 

The pricing policy of a business also offers important information about its overall  image. The prices charged at ladies'  clothing boutique reflect a completely  different image from those charged  by a  chain  store.  High  prices for some products  frequently convey the idea of quality, prestige, and uniqueness to the customer. 

Competitors' prices can have  a  dramatic impact on your sale. You  should make  it a habit to  monitor  your  rivals'  prices,  especially on identical items. The following two factors are vital  to  studying  the effects of  competition on your pricing policies: location  of competitors,  and the nature of competing products.

  Without  the advantage of  a  unique  business image  - quality of goods  sold, number  of services  provided, convenient location, favorable credit  terms - you  will  have  to  match local competitors'  prices  or lose sales. You also have to  recognize which products  are substitutes for those you sell  and then  strive  to keep your prices in line with them.