Pricing Essay Example | Topics and Well Written Essays - 1250 words

Pricing - Essay ExampleCenter of discussion in this paper is set that can be approached at three distinct trains such as industry level, market level, and transaction level. Industry level pricing process considers overall economics of the industry including changes in customer compulsions and supplier harms. Zuponcic states that Market level pricing takes into account market trends and competitors strategies whereas, transaction level pricing specifically focuses on the discounts management. Modern marketers practice a range of pricing strategies mainly including bell plus pricing, skimming pricing, market oriented pricing, discernment pricing, premium pricing, price leadership, target pricing, absorption pricing, and value based pricing. A set of economic factors is to be considered before recommending a pricing strategy for a particular product since pricing is the most effective profit lever. As Sloman points out, it is necessary to evaluate market demand and price elastici ty of the product. For instance, if there is exalted market demand for a product, the marketer can fix a relatively higher price whereas he leave be forced to depress product prices when market demand declines. Some products including jewelleries and automobiles are very sensitive to price and therefrom, even a small increase in price get out lead to a noticeable decline in their market demand. As Clausen indicates, economic theories do not encourage the setting of higher prices for such price sensitive products. In addition, issue costs and expected profit margin have to be analyzed enchantment choosing a pricing strategy.... In addition, production costs and expected profit margin have to be analyzed while choosing a pricing strategy (ibid). When a products cost of production is high, firms generally charge higher prices in order to ensure adequate return on the huge investments. In the view of Senior (1852, p. 102), organizations need to consider huge profit margins if the cost production is high and fix a low profit margin if production costs incurred are coterminous to the ground. Shaw (2001, pp.58-59) points out that market structure also plays a crucial role in ensuring successful pricing since market demand is the key driver crumb product movement. To illustrate, a skimming pricing policy would probably fail to attract customers in a market where competition is intense, because a set of different product choices are available to customers. Therefore, it is better to adopt a cost plus pricing policy or penetration pricing policy while operating in a highly competitive market environment. Similarly, price discrimination strategy would be advisable in a market which contains versatile population. This strategy seems to be potential for mobile phone industry, particularly to Aslan. According to George, Joll, and Lynk (1992, pp.181-185), in an oligopolistic market environment, a small number of sellers dominate the market and hence economic theor ies advise firms to compete in such market segments with relatively low prices and high production. If a marketer increases his product prices in an oligopolistic market environment, customers will certainly switch their demand to other sellers who market their products more affordably. Marketers must give specific focus on the pricing of simple configurable products. Economic approaches consider that price