Setting the Price Using Varied Marketing Parameters and Needs
Companies set the price based on the market demand and based on the production cost. The other key factor understands the profit margin that is needed to get a company on track. Companies will have a dual set of policy when they go for setting a price. The first strategy is that companies will set a regular price that is unchanged and the second is setting a price that is varied according to festive seasons.
Price skimming method
A company may set a high price for a product and will launch it in the market. The aim is to ensure high returns for the product that will help in quick return on investment. The other option is to retain the advertisement cost that is incurred.
Price skimming is done to break the monopoly competition that is prevalent in the market. The market will have only one to two companies that are ruling and price skimming is done in such a way that product stages price war. This will help in attracting new customers. This method of price skimming is known as penetration pricing and the aim is to chalk out a major market share from competitors.
Return on investment price
A company will have to set a price based on the profit margin it needs. The profit margin is set in such a way that company will need to get back the product cost, and the calculation is done before setting the price.
Assume that company ‘x’ needs a return on investment of 20% on the product that it has produced and company will look first at how many units need to be sold to get 20% returns. Then it will set a price so that consumers will feel like purchasing product.
Setting the price assignment help from myhomeworkhelp.com will use relevant real-life examples like this so that student will understand a topic better.
Geographical pricing
Companies will have to set a price based on the income levels of consumer. There are niche areas in various countries that have huge salaried people, and if a company starts a shop that caters to the luxury needs of these people, they can tap the big market potential.
The same company will have to launch a new product that is not priced high to cater to the needs of low-income consumers situated in a place, and this price setting will help in increasing market share. Setting the price assignment help will cover these dual prices setting policy of companies.
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