As the marketing manager of a large, national, and geographically dispersed organic food store chain, you are to create a marketing essay that identifies the strategic decisions you must make in the areas of price and promotion. In this essay, you will research and provide pricing examples that compare and contrast various factors that influence promotional strategies for each of the five pricing strategies: premium pricing, penetration pricing, economy pricing, psychological pricing, and promotional pricing.
Solution
Introduction
Every organization is looking to come up with the effective pricing strategy. Interestingly, the pricing strategy creates the good impact on different promotional activities. These pricing strategies can be used for both, attraction and promotions of different products and services. With the perspective of the marketing, an appropriate pricing strategy is a powerful promotional tool for the management, and it actually works in the competitive market. Premium pricing, penetration pricing, economy pricing, psychological pricing, and promotional pricing are some options for the company to create the influence on the promotional process. It depends on the business nature, product, and market that help the company shape the pricing strategy.
Pricing & Promotion
There is a strong relationship between the pricing and promotion. Attractive visual, free samples and the comprehensive contents are good promotional traits. However, the price is the source to accelerate this process. It is a fact that the customer has to pay a certain amount for the product. When using a particular pricing strategy, the customer may change the perception and willing to pay the amount, which is expected by the company. Thus, pricing shapes the behavior of customers in the competitive market. Pricing promotion is not costly, and it can be easily adopted by any company to gain the benefits (Ingenbleek & Lans, 2013).
Premium pricing
The premium pricing strategy is a prominent pricing practice, which has been adopted by many companies in different industries. The premium pricing strategy indicates the artificially high prices of products and services to persuade the favorable perception in the market. For Instance, Apple Inc is using a premium pricing strategy for I phones, as customers have to sustain their high image in society through purchasing luxury. It boots the promotion, as customer thinks there is something unique and different, which justify the premium or high price as compared to other technology companies. The use of the premium pricing is a good marketing or promotional trait, which is workable in many industries (Langer, 2016).
Penetration pricing
The penetration pricing strategy has also been adopted by many companies to enhance the visibility of attraction and positive customer response. The penetration pricing refers the low pricing of products and services for customers in order to increase sales. For example, Wal-Mart, a prominent retail chain, is containing the “Everyday Low Prices”. The company management is promoting is high-quality retail products through comparatively low prices to gain the advantage over other competitors. Developing the new product and promoting it through this strategy works for the company (Stefko, Gburová, & Jurková, 2011).
Economy pricing
The economy pricing is also suitable for many retail businesses. The economy pricing is the low price of goods and services that contain low production cost. The economy pricing cannot be applied to all products, as it is linked to the cost of production. For example, the cost of marketing and production of the generic item is low. Thus, these products are usually promoted through economy pricing. It actually helps the customer make some quick buying decision. For these specific products, there is no need for promotional investments, as the economy price is enough to a attract customers (Stefko, Gburová, & Jurková, 2011).
Psychological pricing
Psychological pricing is also called the charm pricing. The purpose of this strategy is to create the Psychological impact on customers. For example, in the retail business, the management depicts the price of product or service slightly lower than the actual price. Depicting the little less than round number is a kind of promotion of the particular product. In terms of marketing, customer psychologically thinks that the price is lower than other companies. In result, he makes the buying decision (Langer, 2016). It seems the new promotional trends in different industries, and it is generally accepted. For example, Wal-Mart is showing Rollback price as 3 for 99$.
Promotional pricing
The promotional pricing is in the limelight in different markets. The management of the company usually intends to keep the price of products low for a short period. The purpose is to increase sales attract re customers and meet different sales and stock targets. It seems a sales promotion and, which enhances the visibility of customer attraction and satisfaction. The influence on the promotion is quite visible, as it increases the product demand. For example, Papa John offers “buy one get one free” for its pizza. It usually attracts customers and increases sales for a while (Stefko, Gburová, & Jurková, 2011).
Conclusions
In end, it is to conclude that different organizations are using different pricing strategies for attraction and promotions. In the contemporary business era, the pricing strategy has become a powerful tool for the management for getting products or services in the limelight. The general perception can be created by depicting the low price of high-quality products. However, the modern business needs some promotional traits, which can be enhanced or initiated through suitable pricing strategy. To make pricing strategy and increase buying decisions, integrating with customer needs is necessary.
References
Ingenbleek, P. T., & Lans, I. A. (2013). Relating price strategies and price-setting practices. European Journal of Marketing, 47(1/2), 27-48.
Langer, H. (2016, March 3). Seven-Point Checklist For A Successful Price And Promotions Strategy. Retrieved from http://www.cmo.com/opinion/articles/2016/2/9/seven-steps-all-retail-marketers-should-follow-for-a-successful-price-and-promotions-strategy.html#gs.TkXDgRc
Stefko, R., Gburová, J., & Jurková, J. (2011). Marketing Pricing Strategies Used By The Branches Of Chain Stores. Journal of Advanced Studies in Finance, 2(2/4), 21-22.
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