Price Planning is it Relevant
... When you find the right price, profits will skyrocket; your customers will be happy; and your business will prosper. ... Price, one of the Marketing Mix’s “Four Ps”, is an often-misunderstood weapon in the marketer’s arsenal. Too often, small- and medium-sized enterprises rely on Price to carry the weight for its “little brothers” - Product, Place, and Promotion - in the firm’s marketing battles. ... Of course, a price that is way too high may simply make the product unaffordable. On the other hand, a low price provides little opportunity for new product development, expanded product placement, or creative promotional initiatives. As a result, once they start down the price spiral, firms often perceive the necessity to compete on price alone. However, the truth is that Product, Place, and Promotion are marketing weapons at least as valuable as Price. ... Customer Delivered Value Customers buy a product because of its value proposition, not its low price. ... Each variation is an attempt to avoid price competition by offering something unavailable from other retailers or service providers. You can get a briefcase at Cave Shepherd for less than $50, but if you want a genuine Samsonite hard-sided case with special hinges to prevent it from opening while it’s upside-down, you’re going to have to “suck it up” and pay the price, why, because those features cost a little more. ... Pricing Strategy When planning your pricing strategy, four basic components should be considered to obtain financial success: 1. ... Price Sensitivity - The price sensitivities of buyers shift based on a number of factors and your pricing strategy must shift with them. ... Product Lifecycle - How you price, and what value you provide for that price, will change as you move through the product lifecycle. ... The only way to accurately determine how much money you can afford to spend on development, support, promotion and the other costs associated with a product is to analyse how much of that product you will sell, and at what price. ... Dont use the cost of developing your current product as the basis for its price. Instead, use the current costs of developing your new products as the basis of the price of your current product. Raise Price to Exploit a Reticence to Switch Once the customer is yours, the situation switches in your favor. ... For you, price sensitivity is much lower as comfort and ease factors increase. ... Dont get caught in a no-win price war--which may hurt your product, their product and devalue your marketplace. Align with the Product Life Cycle How high or low you set your price is also going to be driven by where your product is in its life cycle.