Pricing
Where manufacturing is expensive, distribution is exclusive, and the product is supported by extensive advertising and promotional campaigns, then prices are likely to be higher.
Price can act as a substitute for product quality, effective promotions, or an energetic selling effort by distributors in certain markets.
Typically line managers are given the latitude necessary to vary individual prices providing that they operate within the broad strategic approach.
Rao and Kartono carried out a cross-cultural study to identify the pricing strategies and tactics that are most widely used.
[16] There are various forms of price difference including: the type of customer, the geographic area served, the quantity ordered, delivery time, payment terms, etc.
[18] Enormous retailers can request value limits from providers and make a rebate evaluating system powerful as they purchase in mass.
This type of pricing strategy is a predominant showcasing procedure to draw in shoppers by providing an additional worth or motivator, which urges customers to buy the advanced items right away.
In other cases, geographic variations in prices may reflect the different costs of distribution and servicing certain markets.
This approach is widely used in situations where customer switching costs are relatively high such as in home loans and financial investments.
The operator may also try to cross-sell the client on additional services such as spot-cleaning products, or stain-resistant treatments for fabrics and carpets.
The underlying rationale of this tactic is that these amounts are seen as suitable price points for a whole range of products by prospective customers.
The objective is to charge relatively high prices in order to recoup the cost of product development early in the life-cycle and before competitors enter the market.
Promotional pricing is sometimes a reaction to unforeseen circumstances, as when a downturn in demand leaves a company with excess stocks; or when competitive activity is making inroads into market share or profits.
Two-part pricing tactics are widely used by utility companies such as electricity, gas and water and services where there is a quasi- membership type relationship, credit cards where an annual fee is charged and theme parks where an entrance fee is charged for admission while the customer pays for rides and extras.
As well as brand, product attributes such as eco-labelling and provenance (e.g. 'certified organic' and 'product of Australia') may add value for consumers[41] and attract premium pricing.
People have generally become wealthier, therefore the mass marketing phenomenon of luxury has simply become a part of everyday life, and no longer reserved for the elite.
[42] Since consumers have a larger source of disposable income, they now have the power to purchase products that meet their aspirational needs.
Charging a premium price for a product also makes it more inaccessible and helps it gain an exclusive appeal.
Due to a firm having great market power they are able to charge at a premium for goods, and are able to spend a larger sum on promotion and advertising.
[44] According to Han, Nunes and Dreze (2015) figure on "signal preference and taxonomy based on wealth and need for status" two social groups known as "Parvenus" and "Poseurs" are individuals generally more self-conscious, and base purchases on a need to reach a higher status or gain a social prestige value.
Marketers understand this concept, and price items at a premium to create the illusion of exclusivity and high quality.
Market based incentives are given in order to encourage people to practice their business in an eco-friendly way in regard to the environment.
[46] Associations such as the MSC's fishery certification program and seafood ecolabel reward those who practice sustainable fishing.
[54][55] The practice has often caused passengers to become upset and invited criticism when it happens as a result of holidays, inclement weather, natural disasters, or other factors.
[58] Uber CEO Travis Kalanick has responded to criticism by saying: "...because this is so new, it's going to take some time for folks to accept it.
Research has shown that this practice can significantly influence consumers' ability to understand and process price information.
[64] Consumers that fall under the "Snob Effect" can be described as individuals that search for perceived unique value, and will purchase exclusive products in order to be the first or very few who has it.
Research shows that people will often conform to what the majority of the group they are a member of thinks when it comes to the attitude of a product.
Paying a premium price for a product can act as a way of gaining acceptance, due to the pressure placed on them by their peers.
Consumers who fit into this category base their purchasing decisions on a perceived emotional value, and gain intangible benefits such as sensory pleasure, aesthetic beauty and excitement.
