Every entrepreneur has a developed strategy, including pricing.
What is pricing strategy? It is a determinant that affects the comprehensive development of a company. Its importance is based on making the final decision regarding the positioning of the company among industry competitors. In the process of specifying monetary values for a specific assortment or service, as well as in the internet marketing strategy , factors such as the economic situation, average costs in the industry, the company's reputation, its field and the characteristics of the target group are taken into account. What functions of prices accompany businessmen in e-sales?
Calculating price from a marketing perspective
An entrepreneur presenting his offer on the market (including the appropriate price of products) charges a certain fee for it, depending on many factors. One of the determinants is the need to stay ahead of the competition. That is not all, because for a company to be profitable, it must generate certain profits while incurring operating costs (it is more important to establish a retail margin). Undoubtedly, marketing strategy and manufacturer price are compatible with each country code +30, greece phone numbers other, creating a message addressed to a consumer group. What do the individual functions of price mean in marketing and in the world of dynamically developing business?
Information function – when it comes to such functions of price, they consist of informing the consumer about the established value of the offered products or services (retail prices, fixed prices). This is a direct signal to the customer, who is facing the right decision regarding the choice of using the company's services.
Promotional function – price is used as an element in market competition or in encouraging the consumer to undertake purchasing activity. You can set a good price or operate it depending on the situation, decide on discounts, reductions to attract a group of interested recipients.
Image function – you are probably aware that price in marketing is a kind of indicator of the quality of services provided. Often, its high values indicate a good reputation of the brand and its considerable importance in the market area.
Redistributive function – what functions does price play in marketing in this case? Namely, it is a contribution to the categorization process, manifesting itself as an instrument of dividing products or services. This method of accounting is used by the state treasury, which plays a dual role – it offers partial funding and forces payment of taxes.
Simulation function – price functions are identical to simulation and what effect they have on potential customers. Higher rates generate more substantial profits, while lower rates are often associated with lower profitability of producing goods or providing certain services. The presented relationship precisely indicates stimulation by the consumer market.
Wildcard price message
The precisely defined values of products or services are accompanied by messages directed to potential new customers. There can be several pricing strategies, and one of them is the cream-skimming strategy. This method works perfectly with assortments that have just appeared on the market. Sellers are guided by the belief that some buyers are willing to spend larger sums of money to get something that fits into current trends.
Another tactic is low price, which is intended to generate the possibility of a larger market share in the industry. However, there are cases of deliberately underestimating the value for the purchase of a specific product or service. This practice is called deliberate elimination of competition, and its crux is to gain the attention of every consumer.
Interestingly, one of the observable and still used activities in the area of sales is the recording of the price, e.g. instead of PLN 300, manufacturers present the amount as follows - PLN 299.99.
Price in marketing has many faces
When establishing the functions of price in marketing and the costs for a given product for the offer of the conducted business, it is worth precisely defining the budget for the production of a specific assortment or distribution of a given service to the consumer. This refers not only to materials intended for the execution of the order, but also to the amounts covering the workload and expenses paid for managing the company. It is also important to observe the actions of the competition, including the pricing policy. Choosing the right pricing strategy is not one of the easiest tasks, but it is worth analyzing the results of each of them.
Low vs. high prices
By offering low prices (so-called wholesale prices), you can expect a rapid increase in sales. However, there are two sides to the coin. High demand for the product offer is associated with an increase in production, and thus a guarantee of an appropriate supply. A lower price, i.e. the value of the product, can translate into the quality of the product, which is the result of the first impression of customers (business entities).
The situation is slightly different if the price level is raised to a higher level. Products/services gain the status of exclusive in the eyes of customers. In order for the tactic to bring the expected results, the brand's image sphere must be taken care of. Often, only the biggest leaders in the industry, who put all their efforts into developing appropriate marketing communication and have a slightly different pricing policy, can afford practices focused on variable price functions in marketing.
Price in Marketing – Balance
The proposal of the average price value under the same sales conditions is the pricing policy that can be most often encountered on the market. Although the entrepreneur's offer reaches many, often diverse groups of consumers, it is also necessary to take care of a number of other, key elements among the numerous competitors, also taking into account the economic situation. This is where difficulties arise, because putting forward a valid argument for choosing the right assortment requires creativity from the company manager.
We hope that after reading our article you know how to deal with industry rivals and what are the functions of price in marketing . Think about which solution and which pricing strategy will be a bull's eye for your e-business!
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