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Table of Contents
Starting a new company is a very serious and responsible step that requires attention, devotion, and analytical thinking to set the appropriate and successful strategies for the company´s success. Selecting a right pricing strategy is a crucial aspect in business operations. The major pricing strategies include penetration, skimming, competition, premium, product line, bundle, psychological, optional, cost based, and cost plus pricing. The current paper presents the most suitable and effective pricing strategies for the companies in the following four cases.
The first case reveals the issue of the new television company. The organization should employ the premium pricing strategy. The approach predetermines that the company sets a rather high price in order to show the exclusiveness and superiority of the product (Burton & Holden, 2008). The fact is that the analyzed company claims to be the first organization to patent a new technology that does not require glasses to see the 3D effect and has an improved display as compared to competitors’ 3D televisions. Thus, the company can take the current position of the market leader. Today, the organization does not have any competitors, since it presents a unique service to customers and provides high quality. Consequently, the company will not have any serious competitors in the nearest future. The reason is that the development of the same service takes time, money, and effort. Therefore, the companies that decide to compete with the pioneer organization will need at least one year to achieve the desired results and present a competitive service. To conclude, the premium pricing strategy is the best one for the analyzed organization for several reasons. First and foremost, the company can capitalize on the unique and exclusive service, and the premium price would not affect the competitiveness. Second, it will help the company convince the current and potential clients of its high quality service.
The second case presents the company that has developed a new dishwasher detergent. The recommendation for the organization is to use the skimming pricing strategy. The specific feature of the method predetermines that an organization first sets the high price in order to compensate the expenses, but eventually starts decreasing the price (Burton & Holden, 2008). The company under discussion offers a new product that is of the same quality and price as substitute items offered by competitors in the market. However, the company expects the price of its product to reduce in the future. Hence, the company will offer the product of the same high quality for a lower price to sustain the competition. According to the tactic taken by the organization, the skimming pricing strategy is the one that suits the current business environment. The approach corresponds to the company’s mission statement, which is to become a leader in the market through offering a low price and the high quality of the product. Due to the fact that the company has developed a new manufacturing technology, it can afford setting high prices. The initial increase in the price covers the expenses for the equipment necessary for manufacturing. Upon covering the start-up expenses, the company will possess a unique technology in the market and will be able to reduce its prices. As a result, the business will have more clients than its competitors.
The third case offers a situation of the new shop, which is in need to penetrate the market. The store has a lot of competitors and the location has many other electronics shops. Moreover, the competitors are in the market for many years and have already gained popularity. The most appropriate pricing strategies for the shop are the penetration pricing and the competition pricing strategy. By utilizing the penetration pricing strategy, the shop owners set a rather low price in order to attract the targeted audience, increase sales, and improve the market share (D’Antonio, 2012). As soon as the market share is captured, the shop may increase its prices gradually. In the competition pricing strategy, the shop has to compare the proposed prices to its competitors (D’Antonio, 2012). The shop can have the option of increasing prices, decreasing prices or leaving the same level. However, in case of the shop under discussion, it is necessary to set lower prices than the market average. Consequently, the shop should set lower prices not only for secondary electronic goods, but for iPhones as well. The proposed pricing strategies will allow the shop´s owners to present their store as a competitive business in the market. Lower prices, especially for Apple gadgets, will attract the targeted audience. Thus, the shop owners can choose any of the two abovementioned pricing strategies, since the end result is the same.
The case four is about a new fashion company that established a goal to manufacture blue jeans. The company expects to create the exclusive line of brand jeans, which is projected to possess high valued among fashion- consumers. In order to achieve the goal, the company should use the premium pricing strategy. The principle of the approach is in setting the high costs of a product in order to promote its exclusiveness (Richardson & Gosnay, 2010). In order to complete the task, the company has to create the specific conditions to support the market opinion that the product has unique design, features or characteristics. The benchmarked features should differ from the similar products in the market and lead to a competitive position. In other words, the company should operate the unique method, which is not applied by other competitors. The current case shows that the exclusiveness may be achieved using the services of a designer from Italy. Hence, the premium charged price on the regular product as blue jeans will be justified by the fact that they were designed by a fashion guru from Italy. The exclusive feature of blue jeans manufacturing will give a chance to create a brand name and separate it from the similar products in the market.