Marketing Case Study for Glitz
MKT1003X Marketing | Glitzz: Devising a Pricing Strategy | Marketing Case Report (5) | |
1. What factors affect the pricing decisions for a product such as Glitzz?
Analyze these factors and comment on the range of prices that can be set.
The right price must generate enough sales dollars to pay for the costs of developing, producing, distributing and marketing the product as well as earn a profit for the company. There are various factors that affect the pricing decision such as objectives, demands and market forces. We will examine these factors in detail below.
1.1 Company Factors
Before embarking on pricing decisions, it is necessary to understand company’s objectives. Lee Jr. and Albert are looking to achieve long-term profit making and sustainability in the market. Higher importance would then be given to obtaining increased market share and sales over immediate profit making. Glitzz needs to focus on gaining foothold in the market, as it would be a new product facing relatively established competing brands and products. As such, Glitzz should not be priced at premiums but instead work to encourage trials, consumer acceptance and return business. If successful, high profits should follow.
1.2 Consumer Factors Consumer factors such as demand for the particular product class, product or brand, price and availability of similar product, price sensitivity as well as perceptions of value can affect pricing decisions and help Lee Jr. and Albert gauge feasibility and acceptability of prices. The demand for the product is extremely important for pricing decisions. The greater the demand, the higher can the product be priced. Demand by consumers is affected by four factors. (1) Consumer Tastes (2) Price and Availability of Substitutes (3) Consumer Income and (4) Price of product. Glitzz can be classified as unsought goods; products that potential consumers do not normally want or know they can buy. These products are not searched for and do not
1. What factors affect the pricing decisions for a product such as Glitzz?
Analyze these factors and comment on the range of prices that can be set.
The right price must generate enough sales dollars to pay for the costs of developing, producing, distributing and marketing the product as well as earn a profit for the company. There are various factors that affect the pricing decision such as objectives, demands and market forces. We will examine these factors in detail below.
1.1 Company Factors
Before embarking on pricing decisions, it is necessary to understand company’s objectives. Lee Jr. and Albert are looking to achieve long-term profit making and sustainability in the market. Higher importance would then be given to obtaining increased market share and sales over immediate profit making. Glitzz needs to focus on gaining foothold in the market, as it would be a new product facing relatively established competing brands and products. As such, Glitzz should not be priced at premiums but instead work to encourage trials, consumer acceptance and return business. If successful, high profits should follow.
1.2 Consumer Factors Consumer factors such as demand for the particular product class, product or brand, price and availability of similar product, price sensitivity as well as perceptions of value can affect pricing decisions and help Lee Jr. and Albert gauge feasibility and acceptability of prices. The demand for the product is extremely important for pricing decisions. The greater the demand, the higher can the product be priced. Demand by consumers is affected by four factors. (1) Consumer Tastes (2) Price and Availability of Substitutes (3) Consumer Income and (4) Price of product. Glitzz can be classified as unsought goods; products that potential consumers do not normally want or know they can buy. These products are not searched for and do not