Pricing Strategy and Channel Distribution

Pricing Strategy and Channel Distribution

Table of Contents

Pricing Strategy1

Penetration Pricing Strategy1

Product Line Pricing2

Value Pricing3

Competing against Private Brands3

Legal and Ethical Issues Related To the Pricing Tactics4

Marketing Distribution Channel5

Considerations to Take into Account:6

Pricing Strategy and Channel Distribution

Pricing Strategy

The paper discuses the pricing strategy and channel distribution for a hypothetical company “Grace Interior Designers”. Price is one of the most effective tools marketers have in setting customer expectations and developing consumers' perceptions of their product. It is also one of the most effective tools in managing the demand for the product. When a company is determining the price for a product, managers must consider what expectations they want to set in the mind of the customer. The product expectations created through a company's marketing will directly impact the customers' perception of the product and their willingness to purchase the product (Baker & Walter, 2010).

Penetration Pricing Strategy

Price is the value a consumer equates to a good or service or the amount of money or goods asked for in exchange for something else. It argued that this is the most important element of the marketing mix because there are costs associated with producing, delivering, and promoting products, and it also directly affects the bottom line, or financial profitability, of an organization. As with the low price strategy, a product is introduced at a low price in the market so quickly gained market share and thus succeed in sealing off one against the competition. Price increases will be made gradually thereafter. As a competitor company in the market, the penetration strategy would be more suitable for Grace. The reason is to capture the market and share and increase customer base for Grace. In the penetration strategy, Grace Interior Designers is seeking ways to introduce a new product in a market that ignores the characteristics of the new offer. Thus, concentrated efforts are required to reduce prices as much as possible, to avoid that they become brakes for purchase. This idea of selling at the lowest price is determined by competition and what consumers regard to this product. This strategy is often applied as there is evidence of a strong potential market, and the crowd of competitors is remarkable.

Disadvantages of this strategy can be seen in the fact that low prices from a customer perspective are often equated with low quality. Moreover, the price consciousness of consumers is in the low level implementation. Consequently, it can be difficult to enforce price rises on the market. However, this is easily achieved if the provider could exclude potential competitors from the market so much that he has a monopolistic position in the market holds (Kirkman & Clark, 2009).

Product Line Pricing

To succeed in marketing both Grace Interior Designers and intermediaries need to carefully planned strategies to manage its product mix. Strategies are needed to manage to existing products for some time, add new and remove products that do not sell. Strategic decisions should also be made regarding the brand, packaging and other characteristics of product, as ...