As a marketing strategist, one of the fundamental things that one is supposed to do is to ensure that the products that get into the markets do meet the value of the customers. It is always important for companies to have a high value for their goods so that the customers feel satisfied because that is the only way that the companies can manage to make profits. Businesses have become competitive and businesses have become so dynamic in their production processes. In order for a business to survive in the competitive business world, they must ensure that that they create a superior customer value. In trying to create the customer value, a business may be faced with at task of ensuring that they price their products according to the benefits that the customers will derive from the consumption of that product (Gross et al. 1990). However, for most of the customers, the issue of pricing may not really be quite significant at times when faced with the task of purchasing.
The customers normally look around the entire market and make their purchasing decisions not entirely on the prices of the goods or services offered. On the contrary to what other entrepreneurs think, customers make their decisions based on a number of factors, one of them being the value of the product (Gross et al. 1990). The value of a product to a buyer is the benefit that they derive from the product purchased in relation to the foregone satisfaction. In general the prices of products do reflect what one has to five up in order to purchase the other. Therefore a customer will perceive a value of a product based on the pricing strategy of that same product. The perceived cost of a product should always match the perceived benefit that is derived from the same product. At times it might be difficult in knowing what the customers perceive to be of a high quality or beneficial to them since the consumer preferences also differ from one buyer to the other.
In most cases, the value of a product changes proportionally to the changes in prices of goods and services. The value can be measured in terms of what the buyer has to give up in exchange of that product. For instance, a customer may have to learn how to use a certain product, meaning that they will have to spare their time from doing other activities. Additionally, they may buy a product but at the same time pay extra fees to have an old product removed for the new product to be installed in place of the old product.
When coming up with a service pricing strategy, businesses should take into considerations a number of issues such as penetration pricing for new products. When a new product is launched into the market, it is important that a company uses low pricing strategy so that it lures customers from their current competitors (Sydney and Harper, 1963). Moreover, low prices help a product in market penetration thereby gaining strong clientele over time.
Another factor that ought to be taken into consideration is the economy pricing which dictates the lowest amount of money that a company can charge for its products. Economy pricing also helps in cutting down costs on expenses such as marketing and product branding. There is also the issue of price skimming that helps in knowing the best prices that can be adopted in the market based on the competitions in the market. If there are many competitors in the market, then the best strategy is to lower the prices in order to compete effectively.