How To Identify the Appropriate Price Strategy
Chron discuss how your pricing strategy affects customers and their perceptions of the value of your products. Consequently, this makes decisions about pricing crucial to reaching break-even and becoming profitable. While long-term business plans set the general direction, no single strategy works for every product or service your business offers for sale. Instead, pricing strategies tend to differ according to marketing objectives and a products place within its life cycle. The following can help in achieving a better pricing strategy:
- Analyse the product or service
Begin with analysing aspects and characteristics of the product or service that affect pricing decisions. Review your marketing plan and marketing mix decisions, such as how you intend to approach promotion and distribution. Include the target market, product costs, estimated or actual consumer demand and both direct and indirect competition in your analysis. - Set pricing goals
Move forward in identifying an appropriate pricing strategy by setting pricing goals. In addition to linking closely to the product life cycle stage, most strategies relate in some way to market share or penetration, cost control and profitability. For example, sales revenue and distribution maximization, quality leadership and maintaining the status-quo are among the most common pricing goals. - Research pricing strategies
Research and become familiar with the focus and characteristics of different pricing strategies. Examples of different strategies to research are price skimming, promotional, penetration, economy. psychological, product line and product bundling and value pricing strategies. It is important to research pricing strategies carefully. - Identify the appropriate strategy
The right pricing strategy for a product or service might not be a single strategy. Instead, the most appropriate strategy might be to combine two or more strategies into one.
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