FCB Grid
Competitive Pricing Strategies
Part 1
The role of pricing is the second important thing after the product. Pricing is used to attract customers and is often manipulated by the industry concerned or by competitors. Items which are in demand can have their prices inflated as people will not hesitate to pay higher prices as they are seeking these products. These items are often not worth the prices being demanded but due to branding and advertising, consumers will pay whatever price is being asked from them. This could be due to their perceptions of the brand and product or because they must have the product. An item which is out of stock everywhere will make that item more appealing and exclusive to people. Once the demand decreases for these products, the prices will also come down. Supply and demand is directly linked to the pricing of any product. The demand and price will decrease once retailers are fully stocked up and the product is available everywhere. The demand is always high when a new product is released as companies will spend many months advertising and creating a huge build up before releasing their product. The Playstation 4 and Apple iPhone are examples of this where companies have charged maximum prices due to such high demand. I have personally seen items being sold for double the price on Ebay as they are out of stock everywhere.
Consumers will also pay extra for experience such as eating from a particular restaurant even though their food is cheap to make. The same food will be available cheaper elsewhere but price is connected to the value of the product and consumers feel that by paying a high price they will be getting a quality product. Price is connected to the brand and the product being sold and some brands are able to demand a premium. Competition amongst retailers also effects pricing of items especially if the item is a commodity. An example of this is the price wars supermarkets have on petrol and diesel prices. This drives
Part 1
The role of pricing is the second important thing after the product. Pricing is used to attract customers and is often manipulated by the industry concerned or by competitors. Items which are in demand can have their prices inflated as people will not hesitate to pay higher prices as they are seeking these products. These items are often not worth the prices being demanded but due to branding and advertising, consumers will pay whatever price is being asked from them. This could be due to their perceptions of the brand and product or because they must have the product. An item which is out of stock everywhere will make that item more appealing and exclusive to people. Once the demand decreases for these products, the prices will also come down. Supply and demand is directly linked to the pricing of any product. The demand and price will decrease once retailers are fully stocked up and the product is available everywhere. The demand is always high when a new product is released as companies will spend many months advertising and creating a huge build up before releasing their product. The Playstation 4 and Apple iPhone are examples of this where companies have charged maximum prices due to such high demand. I have personally seen items being sold for double the price on Ebay as they are out of stock everywhere.
Consumers will also pay extra for experience such as eating from a particular restaurant even though their food is cheap to make. The same food will be available cheaper elsewhere but price is connected to the value of the product and consumers feel that by paying a high price they will be getting a quality product. Price is connected to the brand and the product being sold and some brands are able to demand a premium. Competition amongst retailers also effects pricing of items especially if the item is a commodity. An example of this is the price wars supermarkets have on petrol and diesel prices. This drives