Got a tricky question? Receive an answer from students like you! Try us!

Pricing Strategies - Essay Example

Only on StudentShare
Pages 3 (753 words)


Pricing is a major component of the 4Ps and is an essential element of any marketing strategy. Setting the price too high can lose sales and market appeal. Setting the price too low can erode profits and drive a product out of the market. The ZC gemstone is presented with a unique situation in which the product has not been offered to the buyers before…

Extract of sample
Pricing Strategies

Competition-based pricing would allow the ZC gemstone to enter the market at a known acceptable price. It would provide the flexibility to offer prices at or slightly below the competitors. This would eliminate the need for market research. It would also gain immediate market share from the competition upon launch of the product.
Competition-based pricing would also tie the price to the overall market. That would benefit the company by taking advantage of increased profits when the market went up and continuing to sell as the overall market dropped. Because the product does offer a unique quality advantage, ZC could be priced slightly higher than the competition. However, Finlay et al. (1996) warns, "[...] consumers may easily isolate products which are overpriced and disregard them in their buying decision making process" (p.73).
When using a competition-based pricing strategy, there needs to be considerations made for cost and survivability. If the price is set below the competition's lowest price, it may be below the cost of manufacturing it. It should be noted that in a competition based pricing strategy, the price will be set by the "least sophisticated or most aggressive competitor" (Docters 2003 p.18). In an attempt to eliminate the competition, it may drive ZC out of business. ...
Download paper
Not exactly what you need?

Related Essays

Factors that Determine the Pricing of Airline Ticket
It was noted that ticket prices are relatively higher in 1978, wherein passengers disburse 19 cents per mile. As compared to the present price, which is 14 cents per mile, it is relatively higher. Thus, there is an increase in the influx of passengers (Bonsor, 2006).…
10 pages (2510 words)
Product Pricing Strategy
Hence, it is very important that the organization should know all their costs in developing the products and in their marketing & inventory holding. Once the internal thresholds are known there are multiple additional factors that drive pricing decisions from market perspective. Monroe and Bitta (1978. pp414) presented a consolidated view of multiple models of product pricing decision classified as - new product models, product line models, price change models and price structure models. The indicated their choice for market comparisons based pricing - like related products, volumes in…
5 pages (1255 words)
Actual pricing practice: various management accounting techniques within organization
Pricing, essentially a management decision is largely dependent upon accountants’estimation after cost analysis (Hornegren 1984, 82). Consumers, market players, and overheads are the threefold issues that manipulate pricing choices according to Horngren, Charles T., a Certified Public Accountant, and Doctor of Philosophy at Stanford University (Hornegren 1984, 82). Consumers have discretionary sources of goods and services all the time if sellers’ prices are far above the inference of buyers (Hornegren 1984, 82). On the other hand, market players frequently respond by manipulating their…
8 pages (2008 words)
Economics Incresing supermarkets chain profits by adopting different pricing strategies in different markets
This type of marketing strategy involves the introduction of market segmentation by the company, when the segments are introduced then the company is able to price different prices on the goods they sell in the market, higher income earners are charged higher prices while the low income earners example students pay less. Through price discrimination chain supply supermarkets are able to achieve higher profits from the same market.…
3 pages (753 words)