Pricing Strategy and Channel Distribution
The Note Phone Marketing Plan – Pricing Strategy and Channel Distribution
Lisa S Carey
Marketing Management – MKT 500
February 13, 2011
Instructor: Dr. Keith C. Jones
Marketing Plan – Pricing Strategy and Channel Distribution for the Note Phone 1. Determine and discuss a pricing strategy (Penetration or Skimming). Pricing is an important strategic issue because it is related to product positioning and furthermore, pricing affects other marketing mix elements such as product features, channel decisions, as well as promotion. Per Marketing Management, Chapter 8 in Review, “Pricing strategies don’t vary much from low, medium or high”. For new products, the pricing objective often is either to maximize profit margin or to maximize quantity (market share). To meet these objectives, skim pricing (Skimming is a strategy used to pursue the objective of profit margin maximization) and penetration pricing (to pursue the objective of quantity maximization by means of a low price) strategies often are implemented therefore our product will be using comparable pricing as we are not the market leader, we will have to price our product comparably to our competitors. It is most appropriate for our product as we are expecting: * Demand is expected to be highly elastic; that is, customers are price sensitive and the quantity demanded will increase significantly as price declines. * Large decreases in cost are expected as cumulative volume increases. * The product is of the nature of something that can gain mass appeal fairly quickly.
As the product lifecycle progresses, there likely will be changes in the demand curve and costs so as such, the pricing policy will be reevaluated over time to assure we are maximizing our marketing strategies. 2. Determine and discuss pricing tactics (Product line pricing, Value pricing, Differential pricing, or Competing against private brands) to be used for your product. Pricing strategies need to also
Lisa S Carey
Marketing Management – MKT 500
February 13, 2011
Instructor: Dr. Keith C. Jones
Marketing Plan – Pricing Strategy and Channel Distribution for the Note Phone 1. Determine and discuss a pricing strategy (Penetration or Skimming). Pricing is an important strategic issue because it is related to product positioning and furthermore, pricing affects other marketing mix elements such as product features, channel decisions, as well as promotion. Per Marketing Management, Chapter 8 in Review, “Pricing strategies don’t vary much from low, medium or high”. For new products, the pricing objective often is either to maximize profit margin or to maximize quantity (market share). To meet these objectives, skim pricing (Skimming is a strategy used to pursue the objective of profit margin maximization) and penetration pricing (to pursue the objective of quantity maximization by means of a low price) strategies often are implemented therefore our product will be using comparable pricing as we are not the market leader, we will have to price our product comparably to our competitors. It is most appropriate for our product as we are expecting: * Demand is expected to be highly elastic; that is, customers are price sensitive and the quantity demanded will increase significantly as price declines. * Large decreases in cost are expected as cumulative volume increases. * The product is of the nature of something that can gain mass appeal fairly quickly.
As the product lifecycle progresses, there likely will be changes in the demand curve and costs so as such, the pricing policy will be reevaluated over time to assure we are maximizing our marketing strategies. 2. Determine and discuss pricing tactics (Product line pricing, Value pricing, Differential pricing, or Competing against private brands) to be used for your product. Pricing strategies need to also
References: Iacobucci, D. (2011). Marketing management: 2010 custom edition. Mason, OH: South-Western Cengage Learning. Marketing [m.o.] (2006-2010). Distribution Channels. Retrieved February, 13, 2011 from website: http://www.marketingmo.com/ More-for-small-business (2002-2011). Marketing. Retrieved February 12, 2011, from website: http://www.more-for-small-business.com/index.html NetMBA (2002-2010). Pricing Strategy. Retrieved February 11, 2011, from website: http://www.netmba.com/marketing/pricing/ USLegal, Inc. (2001 – 2011). Retrieved February, 12, 2011 from website: http://definitions.uslegal.com/