![]() ![]() Pricing above competition generally requires a clear advantage on some nonprice element of the marketing mix. Pricing above competitors can be rewarding to organizations, provided that the objectives of the policy are clearly understood and the marketing mix is developed in such a way that the policy can be successfully implemented by management. The banking industry often uses this strategy by using technology to actively monitor competitors’ rates, fees, and packages in order to adjust their own prices. Such a definition along with an understanding of competitors’ prices would enable management to put the strategy into effect. A more realistic definition of competition in this case would be other makers of handcrafted leather shoes. If he/she attempts to compete with mass producers on price, higher production costs will make the business unprofitable. A maker of handcrafted leather shoes is not in competition with mass producers. The key to implementing a strategy of meeting competitive prices is to have an accurate definition of competition and a knowledge of competitors’ prices. Quality in production, better service, creativity in advertising, or some other element of the marketing mix is used to attract customers who are interested in products in a particular price category. This strategy means that the organization uses price as an indicator or baseline. Automobiles of the same size with comparable equipment and features tend to have similar prices, for instance. Many organizations attempt to establish prices that, on average, are the same as those set by their more important competitors. ![]() ![]() In general, a business can price its offering to match its competition, or it can price higher or price lower. It also contributes to the company’s position. The pricing process normally begins with a decision about the company’s pricing approach to the market. Price is a very important decision criterion that customers use to compare alternatives. Once a business decides to use price as a primary competitive strategy, there are many well-established tools and techniques that can be employed. A competitor might make a change to a product or initiate a promotion that impacts customers’ perceptions of value and, therefore, their perceptions of price. Actions by different competitors integrate all elements of the marketing mix and do not focus on price alone. It’s important to remember that pricing is just one component of the marketing mix, and even very specific pricing decisions need to take into account the other components. This is particularly true in a competitive marketplace. Describe how competition affects pricing strategies. ![]()
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