Pricing Strategy and Channel Distribution Instructor Institution Date Pricing Strategy and Channel Distribution The title of the company under discussion in this paper is Hall Detergents and the product is hall-washing powder. The company is seeking to introduce its brand-new product into the market and to carry out a market research on the demand of detergents…
Market penetration pricing strategy will introduce Hall detergent at a lower price than the other detergents already existing in the market. The introduced products will come in different packages, each of which will have its price depending on the amounts packaged. The company is aware that it is exploring a competitive market segment where lowering prices at the entry stage will enable the company to acquire its own market niche. Once the detergent has gained a significant share of the market, the company will pursue other strategies and reduce prices accordingly. Market penetration is going to attract people who have never used the detergent before. The company aims at attracting new customers to use Hall detergent for their daily household activities such as washing and cleaning. The penetration pricing strategy will help the company to create a high market share for the new detergent. By using market penetration strategy, the company is going to create the presence of its products in the consumers’ mind. This pricing strategy will create goodwill for the brand name of the detergent and will consequently make them positively attached to the product for a long time. The strategy will create a room for cost reduction and control right from the initial manufacturing stage to the end user. The increase in cost controls will help the company to increase profit margins throughout the channels of distribution and gain a competitive advantage against other companies manufacturing detergents. The tactics that the company is going to adopt in penetration pricing will include price competition and value pricing. The company will employ competitive pricing strategy tactic to penetrate the market already occupied by other players, as well as to set pieces according to the prices of similar detergents in the market. The competitive tactic is aimed at creating a distinction for the Halls detergent from the other detergents in the market. The Hall detergent is going to have a lower cross price elasticity as well as price elasticity, which will increase the demand for the detergent. Competition pricing strategy will create a room for the customers to explore the features of the hall detergent. This product has been made of high quality ingredients to ensure that cleaning becomes a fun activity. The effortless usage of the Hall detergents is the main feature that the company seeks to market using penetration and competition pricing strategies. The competitive pricing strategy will give the customers the right to choose between varieties of products as the company has a chance of displaying their products with high quality features at a lower price. In competition pricing strategy, a seller offers low products produced with low costs. However, the company will not use less quality ingredients in its bid to sell products at a lower price or control prices. The company will produce the Hall detergent with strict quality control and assurance. Once the product has gained its market share, the company will employ a value based pricing tactic. According to Boone and Kurtz (2010), value based pricing tactic will compare the quality and prices of the competing products in the market. The strategy will only work for goods that that are relatively low priced. ...
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