Peter Ducker Pricing Case Study
Pricing
Introduction
Peter Drucker, who is widely regarded as the greatest management thinkers of our time once said:
“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”
Looking at the problems faced by most businesses today, it seems obvious that Drucker was right when he said that Marketing is what differentiates a business and makes it stand out. With the fast paced advancements in technology, it has become very difficult for companies to maintain an edge over others, more so in the world where two businesses transact, …show more content…
It is commonly observed that we pay high price for products or services that are perceived to be of higher value and are scarce in number. Similarly, mass-produced products have a lower perceived value and are usually cheaper. Besides, determining the prices based on value is difficult because perceived value is subjective. Therefore, it is essential for the pricing strategies to conform to the cost structure, profit goals and target customer segments. The key factors that impact appropriate pricing strategy …show more content…
There is no differentiation of the product with its competitors. Customer skepticism is high in such cases and B2B vendors resort to promotional pricing to increase the perceived value of their products or services. There are different methods of promotional pricing in B2B. Some of them are:
Quantity or Bundle pricing: This strategy encourages customers to buy in large quantities by offering them discounts. This strategy is also used to popularize new products by offering them for free with existing popular products.
Close out pricing: This strategy is used to take out excess inventory by offering customers heavy discounts on unsold products.
Buy one get one free: This strategy offers a product for free with another product of the same value which helps increase the perceived value of the product for the customer.
These promotional pricing techniques are used mainly by small-scale B2B vendors to increase the perceived value of their product/ services in the minds of the
Introduction
Peter Drucker, who is widely regarded as the greatest management thinkers of our time once said:
“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”
Looking at the problems faced by most businesses today, it seems obvious that Drucker was right when he said that Marketing is what differentiates a business and makes it stand out. With the fast paced advancements in technology, it has become very difficult for companies to maintain an edge over others, more so in the world where two businesses transact, …show more content…
It is commonly observed that we pay high price for products or services that are perceived to be of higher value and are scarce in number. Similarly, mass-produced products have a lower perceived value and are usually cheaper. Besides, determining the prices based on value is difficult because perceived value is subjective. Therefore, it is essential for the pricing strategies to conform to the cost structure, profit goals and target customer segments. The key factors that impact appropriate pricing strategy …show more content…
There is no differentiation of the product with its competitors. Customer skepticism is high in such cases and B2B vendors resort to promotional pricing to increase the perceived value of their products or services. There are different methods of promotional pricing in B2B. Some of them are:
Quantity or Bundle pricing: This strategy encourages customers to buy in large quantities by offering them discounts. This strategy is also used to popularize new products by offering them for free with existing popular products.
Close out pricing: This strategy is used to take out excess inventory by offering customers heavy discounts on unsold products.
Buy one get one free: This strategy offers a product for free with another product of the same value which helps increase the perceived value of the product for the customer.
These promotional pricing techniques are used mainly by small-scale B2B vendors to increase the perceived value of their product/ services in the minds of the