Business Pricing Strategies

Traditionally, many companies do not have a pricing strategy. The prices were almost always taken for granted, if taken over a product that was developed. Since the market was seen with good prospects, the cost of production and established an appropriate margin. A reasonable price was one that could withstand the client, not many new competitors come and spoil the party to draw. There was nothing particularly well.

Unfortunately, it became more difficult is predicting consumer tastes and cultivate loyalty, despite advances in studies on consumer behavior. Changing lifestyles, increased consumer awareness, the Internet and increased options have been responsible. Coming up with a winning formula, it has been a part of product development and not just be an after-thought.

Pricing strategy and loyalty

The pricing strategy can work, that offer cheaper solutions only when the market is dominated by a few companies. Consumers will generally pay more if the feeling that the product is offered by high quality and reliable. People are less forgiving and want immediate gratification. These factors are price, especially among the strata of middle and upper classes of society.

Prices and new competition

Besides the traditional line of competitive products, modern society faces three new forms of direct competition that never existed before. The first comes from fragmentation of the market segments. For example, a toothpaste 50 years ago was just a tube of toothpaste. What counted was the brand you use. Today we have sub-segments – and its variants – tooth whitening, fresh breath, smoke, herbal and children. This scenario is replicated in almost all products from books to bed.

The second front was opened by the convergence of competing technologies. Companies that have realized the market had done what they expect to see competition from another source. Nokia, for example, had to be found struggling to catch up with Apple for a piece of the smartphone market. Music publishers have to lose to work with Apple or the digital download business had. The same applies to publishers of newspapers and books

The source of competition is the free economy. This is the result of the explosion of the Internet. This made the head of a number of business lines, such as long distance calls, classified ads and newspapers.

To thrive in this pioneering technology, the company needs to adopt a radical rethink. A zero price, similar to zero budgeting help challenge existing practices and get better before the market does. The pricing strategy would be the difference between the exponential growth and decline.

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Tuesday, June 7th, 2011 Business Strategy

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