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Marketing Essay Many factors can be considered when pricing a newly developed product. Pricing strategies, methods of pricing and pricing tactics should all be taken into consideration. The strategies, methods and tactics used can depend on the business’s aims and objectives and whether the business wants short-term or long-term changes to happen. There are three types of pricing strategies: low pricing, market pricing and high pricing. A low pricing strategy can be used when there is strong competition. The price is set lower than the price charged by competitors, and then hopefully consumers will respond in a positive way to the lower, descending price. Market price strategy is when companies set their price identical to the prices of competitors. If prices were held above the competitors’ prices then there is a fear of losing all of their business, and if prices were lower than competitors’ prices then the competitors are forced to also lower their prices, therefore less profit is made by each company. This type of pricing strategy is normally used when a few large companies dominate the market and the competitors have very similar products that are frequently bought. A good example of this pricing strategy is between petrol companies e.g. BP, Esso and Shell. There are long-term and short-term high pricing strategies. The long-term strategy is used when selling high quality goods at a high price to a select market.
Approximate Word count = 875
Approximate Pages = 3.5
(250 words per page double spaced)
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