Pricing Strategies Recommendations For Various Situations

First Situation

A company has developed a new 3D television with outstanding displays.  The company has a patent on a new technology that doesn’t require glasses to see the 3D effect and has a display far better than those of any competitor’s 3D televisions.  The company still has to compete with other television manufacturers, but because of the patent and superior technology it is likely to have a large advantage in the 3D television market for at least a year or two.

Pricing Strategy Recommendation

The company will be best served by the adoption of the Value-Based Pricing (VBN) strategy. VBN entails pricing products based on the value they have for specific clients, or customers, as opposed to pricing them owing to other factors, including production costs (Froehlich & American Animal Hospital Association, 1998; Smith, 2012). The company should price the outside display 3D television sets based on the value they have for specific clients, or customers, as opposed to pricing them owing to other factors, including production costs and patent considerations (Schindler, 2012; Smith, 2012). That is because the value of the outside display 3D television sets to the prospective customers will be many time their production costs owing to the unique technology used in making them as implied by Mills (2002).

Probably, the cost of manufacturing an outside display 3D television set based on other technologies will be comparable to the cost of manufacturing an outside display 3D television set based on the new technology. Even then, the price of the television sets will be dissimilar with the supposed value the buyers are estimated to place on them (Froehlich & American Animal Hospital Association, 1998). The supposed value will be dependent on the choices, or alternatives, available to the buyers. VBN will be suitable for the company since it will help it establish the unique outside display 3D television sets within the extant market. Largely, VBN is used by companies introducing new products to the extant markets since the companies would not make significant sales devoid of the fitting product prices (Schindler, 2012; Smith, 2012). VBN will help ensure that the unique outside display 3D television sets are not excessively priced, otherwise overpricing them would affect the company negatively since prospective consumers would shy away from purchasing them as implied by Mills (2002). VBN will help ensure that the unique outside display 3D television sets are not underpriced, otherwise under-pricing them would affect the company negatively since the company will have a high chances of registering losses or very limited profits.

Second Situation

A brand new company has developed a new dishwater detergent which is comparable to other major brands in quality, but the company has developed a new manufacturing technology that over a period of time should be able to produce detergent at a cheaper cost than any competitor. The cost of the new manufacturing equipment was high, but once the equipment is paid off it should be very cheap to produce each bottle of detergent.

Pricing Strategy Recommendation

The brand new company will be best served by the adoption of the Value-Based Pricing (VBN) strategy. As noted earlier, VBN entails pricing products based on the value they have for specific clients, or customers, as opposed to pricing them owing to other factors, including production costs (Froehlich & American Animal Hospital Association, 1998). The brand new company should price the new dishwater detergent based on the value it has for specific clients, or customers, as opposed to pricing it owing to other factors, including production costs as implied by Mills (2002). That is because the value of the new dishwater detergent to the prospective customers will be many times its production cost owing to the product’s newness in the market (Froehlich & American Animal Hospital Association, 1998).

The prices of detergents are dissimilar owing to the supposed values consumers are anticipated to place on them. The supposed values are dependent on the choices, or alternatives, available to the buyers. VBN will be suitable for the brand new company since it will help it establish the new dishwater detergent within the extant market. As noted earlier, largely, VBN is used by companies introducing new products to the extant markets since the companies would not make significant sales devoid of the appropriate product prices (Schindler, 2012; Smith, 2012). VBN will help ensure that the new dishwater detergent is not excessively priced; otherwise overpricing it would affect the brand new company negatively since prospective consumers would shy away from purchasing it. VBN will help ensure that the new dishwater detergent is not underpriced, otherwise under-pricing it would affect the brand new company negatively since it will have a high chance of registering losses or very limited profits (Froehlich & American Animal Hospital Association, 1998).

Third Situation

You have just opened up a new electronics shop and Apple will be releasing their latest iPhone in a few days.  You are confident that once customers come into your shop they will be impressed with your large selection and knowledgeable and friendly sales staff and will become loyal customers.  However, given the nearby location of Best Buy and other popular electronics shops it will be a challenge to get customers into your shop.  So the first big pricing decision you have to make is what to charge for iPhones.

Pricing Strategy Recommendation

The new electronics shop should a penetration pricing strategy regarding the pricing of the Apple iPhone. Penetration pricing entails instituting low product process to attract buyers, or customers, as well as gain a larger and larger market share (Froehlich & American Animal Hospital Association, 1998). Pricing the Apple iPhone lowly will help the new electronics shop attract buyers, or customers, as well as gain a larger and larger share of the extant iPhone market. The new electronics shop will then raise the price of the Apple iPhone later after attaining the market share (Schindler, 2012; Smith, 2012). The pricing of the Apple iPhone lowly will help the new electronics shop increase its market present share of the iPhone market. As well, it will help in dissuading new shops from coming into market positions where they can compete with the electronics shop in selling iPhones. That will be especially so if the potential competitors will view the electronics shop’s penetration price as being a typical long-range form of price (Froehlich & American Animal Hospital Association, 1998).

The penetration pricing strategy will be appropriate for the new electronics shop since it is gearing up to get into the market. It will also help in creating a large demand for the Apple iPhones it will be selling in future. It will lower the hardships that the shop may face when introducing, or releasing, the Apple iPhones to the market at first owing to the already present competition. Besides, the strategy will help the shop gain the attention of the prospective and present iPhone consumers (Schindler, 2012).

Fourth Situation

You have started a new fashion company, and your partner in this business is one of the top designers in Italy.  You and your business partner’s plan is to become known as one of the premier manufacturers and designers of blue jeans in the world, and hope to have a very high end brand well known among the wealthy and fashion conscience.

Pricing Strategy Recommendation

The new fashion company should use a premium pricing strategy in pricing its jeans. Premium pricing entails keeping specific product prices unnaturally high: to persuade positive buyer perceptions in the light of the prices alone (Froehlich & American Animal Hospital Association, 1998; Smith, 2012). The new fashion company should keep its jeans prices unnaturally high to persuade positive buyer perceptions in the light of the prices alone. That will help the company exploit the inclination of consumers to suppose that costly products enjoy outstanding reputations, are more desirable, are more dependable, or typify exceptional distinction and quality as implied by Mills (2002), (Schindler (2012) as well as Smith (2012).

The company’s customers will be enthusiastic about paying more for the jeans brand, a principal premium pricing motive. The customers will not shy off from the brand’s costs as they are wealthy. Notably, consumers’ novelty for desiring the most recent or stylish trends poses a difficult to marketers, as, they have a duty of entertaining them. The company’s customers will be individuals whose aspirations will be a decisive factor for buying the jeans as implied by Mills (2002). The customers will have a keen eye on the persistent changes in the jeans market, which is moving and evolving constantly.

 

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