Pricing Strategy and Distribution Channels

[Name of the Author]

[Name of the Institute]ABSTRACT

The marketing mix of a product consists of four ps. They are the product, price, place and promotion. All the four ps contribute in achieving the marketing mix. Price is considered as the backbone of the marketing mix as it is the prime factor to generate revenues to the business. It is also important to place the product on the right locations that are in reach to the target customers. Therefore, the research report will cover the two marketing mix; the price and the place. Place is also termed as distribution. The strategies and their impacts will be discussed. 

TABLE OF CONTENTS

ABSTRACTii

TABLE OF CONTENTSiii

Pricing Strategy and Distribution Channels1

Introduction1

Discussions1

Pricing strategy1

Price Penetration1

Price Skimming2

Pricing Tactics2

Product Line Pricing2

Value Pricing2

Competing Pricing3

Private Brands3

Legal and Ethical Issues Related to the Pricing Tactics3

Unfair Trade Practices4

Price Fixing4

Price Discrimination4

Predatory Pricing4

Marketing Channel Distribution5

Role of Distributor5

Role of Wholesaler5

Role of Retailer6

Distribution Strategy6

Product/Service6

Target Market6

Overall Marketing Objectives for the Company7

Conclusions7

Pricing Strategy and Distribution Channels

Introduction

Price and distribution of a product are the two components of the marketing mix. The manufacturer who produces the product or the service sets a particular price for the good or service and decides upon the locations where to place. All these decisions are based on some strategies and they follow certain limitations too.

Discussions

Pricing strategy

A pricing strategy is the set of rules that are decided by the manufactures. It is based on the calculations of their cost of productions and a certain percentage of revenues. There are different pricing strategies according to the nature and characteristics of the product. The different pricing strategies are:

Price Penetration

Price penetration is the tactic of setting the price of a new product. The price is set as a low price. It involves high promotion to attract a large market share. This type of strategy prevents the competition from entering in the market. It is charged on the lower consumer awareness goods and those products too which are sensitive to prices. (www.businessdictionary.com) 

It is set to switch the consumers from competitors to the new launched product. The main marketing aim is to increase the market share and sale volume in the long run. 

Price Skimming

Price skimming is exactly opposite to price penetration. Here the manufacturer sets a higher price to enter in the market. Gradually he lowers the price over time. (www.investorwords.com) 

The main objective to set high prices is to cover the sunk costs before product gets the competition and it lowers the market price. It is also called 'riding down the demand curve'. 

Pricing Tactics

Pricing tactics is also like the price strategies. It is the practice of micromarketing that adapts the products, brands (micro brands) and promotions to meet the needs and wants of microsegments within a market. There are different types of price tactics. Each applies according to the category of the product. 

Product Line Pricing

A product that comes in the market with a variety of class divisions is called as the product line pricing. The product is made in different levels of quality, facilities and features that rise with the rise in the price. A line can range for different colors, shapes, sizes, types ...