Overview
250 word 1 references
Darnell
As the market changes constantly, companies are forced to use many different pricing strategies to gain a larger share of the market. Some of these strategies include competitive pricing, price skimming and penetration pricing. Competitive pricing is when a company sets a price based on what the competition charges. Price skimming is when you set a high price and lower it as the market evolves. Penetration pricing refers to setting a low price to enter a competitive market and then raising it later (BDC, 2023).
As a consumer, I can see these strategies as effective in the marketplace. I know personally that the penetration pricing method has worked on me. This is most apparent when distributors like Walmart started making their own brand of products, called Great Value. It was pretty much the same product as the more famous name brand products, but it was cheaper. Because I was one who liked a deal, I would resort to the slightly cheaper version that works just as well as the name brand. Once in the market, they then raised their prices to match the name brand, but by customer loyalty to the product, they remained profitable.
From a business perspective, the viewpoint of these strategies is to maintain the balance of pricing and profit. You want to make sure you are taking care of your customers but also being profitable. Sometimes, that takes sacrifice. Like cutting prices to help the pockets of your customers, but that could hurt profit. It is difficult to find that balance to survive in the market, and it is even more difficult with the competition in the market.
References
The 5 most common pricing strategies. BDC.ca. (2023, August 1). https://www.bdc.ca/en/articles-tools/marketing-sales-export/marketing/pricing-5-common-strategies
Josh
Good pricing strategies allow you to control more of the market because you have more power in your industry. Having to focus on this topic of concern is good because you will only improve your company. I feel like companies use strategies such as dynamic pricing. Simon Kucher says “Dynamic pricing involves adjusting prices in real-time based on market conditions, customer behavior, and the competitive landscape. Here you must understand customer segments and their willingness to pay and establish tailored pricing strategies” (Sagal, 2023). Dynamic pricing is a smart way of pricing because you are always not at the same price. It allows you to analyze the market regularly. Value based pricing is another strategy to use. Value-based pricing is a strategy that sets prices based on the perceived value of a product or service to the customer (Sagal, 2023).
As a consumer, I view these strategies as effective because of how many businesses are still around. A lot of companies use one of these two pricing strategies and are successful because of the type of market they surround themselves with. My viewpoint does not change if I change my perspective to a business or financial manager. It doesn’t change because the mindset is similar regarding money.
Sagal, S. (2023, November 21). Internal and External Environments of Business - Video & Lesson Transcript | Study.com. Study.com. https://study.com/academy/lesson/internal-and-external-environments-of-business-lesson-quiz.html