Marketing for Competitive Advantage classmate Discussion Thread Price

Heather

Introduction

The 4P marketing mix includes Product, Place, Promotion, and Price. The discussion thread assignment this week is researching the fourth P, Price. Among the 4Ps, Price is the only one generating revenue. The other three are costs (Baray & Pele, 2020). There are many methods for determining how to price a product or service. The articles below research current trends in pricing and the importance of applying the correct method.

Article #1 Value-based pricing

            Value-based pricing is the most complex pricing strategy but is considered superior (Christen et al., 2022). To establish pricing based on a product’s value, the customer must understand its attributes and how they benefit from them. When selling a product using the value-based pricing model, the seller must be able to communicate the value-added attributes and how they translate to Price. The pricing model is dynamic and more challenging for the seller, so sometimes, there are better options for specific products. If the seller can differentiate the attributes and convey the value, the product could be priced higher by understanding all the factors. Hotels need help communicating the value when there are usually multiple options for accommodations (Christen et al., 2022). Not all accommodations are the same value, and those hotels that can differentiate themselves and communicate the attributes that justify the Price successfully attract consumers. In summary, if the product or service provides a differentiating element, it is better to apply the value-based pricing method to apply the proper Price for the value offered to customers.

Article #2 Geographical Pricing

            The establishment of pricing based on geographical location is a common practice. It has existed for many products such as groceries, bathing suits, and raincoats. All these products are needed, but where they are sold can drastically change the Price. For example, bathing suits sold near a beach will have higher prices than those sold in the mountains. The demand for them at the beach drastically increases, so the Price can be adjusted to meet the demand. This article research how to improve the geomarketing mix. With the 4Ps of marketing, a spatial component requires additional research. This research reviews the impacts of geopricing and determines the spatial parameters of each. The researchers concluded that analyzing the supply and demand within a geographical area makes it possible to establish product prices (Baray & Pele, 2020). The model studied the supply and demand in a geographical area over time and was able to predict the price fluctuations of products. The article recognizes that geopricing software will hit the market soon, but their model could be used for less sophisticated companies needing more means to invest in the new software (Baray & Pele, 2020). In summary, geopricing is getting more sophisticated but applying existing models could drastically change the pricing methods in certain regions.

Article #3 Product Life Cycle Pricing

            There are different pricing strategies for each stage of a product's lifecycle. The most challenging stage is the new product stage (Ademi & Avdullahi, 2021). The pricing policy is the company's most crucial decision when producing a good or service (Ademi & Avdullahi, 2021). There are two types of products, and the pricing strategy behind both is very different. The revolutionary product is described as a new product to the market. An evolutionary product is similar to other products on the market but might be slightly different. Pricing for the revolutionary is more complex than the evolutionary. This article researched the approach to both and found that overall, products are easy to produce but hard to sell (Ademi & Avdullahi, 2021). The marketing department must combine all elements to create a successful pricing strategy. The researchers discovered through their literature review of many companies that the marketing department needs to be better integrated, and most need additional investment. The researcher recognized that pricing is the only revenue-generating part of the 4Ps, but the other elements make the Price a success. In summary, Price receives much attention, but the overall 4Ps approach is the only way to apply the correct pricing.

Conclusion

The three articles reviewed on Price indicate that Price and Price alone are not the most essential elements of a product or service. In some industries, it can remain critical, but in other industries, the overall value of the product or service is critical. Understanding the industry and customers is imperative for pricing and will ultimately generate sales. In the 4Ps, Price is an element that typically carries much weight and consideration. However, there are other considerations, and the other elements must be researched and understood.

 

References

Ademi, V. F., & Avdullahi, A. (2021). Pricing strategies for new agricultural products.  Emirates Journal of Food and Agriculture, 33(5), 434-442. https://doi.org/10.9755/ejfa.2021.v33.i5.2705

Baray, J., & Pelé, M. (2020). A new geographical pricing model within the principle of geomarketing-mix.  Recherche et Applications En Marketing (English Edition),  35(3), 29–51. https://doi.org/10.1177/2051570720906077

Christen, T., Hess, M., Grichnik, D., & Wincent, J. (2022). Value-based pricing in digital platforms: A machine learning approach to signaling beyond core product attributes in cross-platform settings.  Journal of Business Research,  152(1), 82-92. https://doi.org/10.1016/j.jbusres.2022.07.042.

Guillermo Lara

Marketing- Price

 

Organizations are seeking ways to connect with potential customers to provide them with their needed products. Marketing teams are seeking to make customers into loyal customers. This can be established by providing the customer with quality products that meet the customer's needs. Marketing teams must manufacture a product and set the right price that customers are willing to pay. Prices are selected based on the cost of transportation, manufacturing, and advertising. "In the United States, retail prices rise faster than they fall in response to changes in international prices" (Ghoshray & Mohan, 2021, p.989).

E-Commerce Price

 

Marketing strategies have evolved over the past four years due to increased e-commerce sales. E-commerce sales rapidly increased over the past four years due to the COVID-19 pandemic that locked down the world for months. The internet has allowed businesses to exchange goods and reach a larger market, becoming the new trend. Online sales can increase word of mouth and referrals, and influences can influence the consumer's attitude to purchase a product (Cao et al., 2021). The Internet retail industry can lower the cost of products and allow them to provide discounts to the consumer. "Price promotions might strengthen the referral's persuasiveness because the cost savings make the purchase even more attractive without quality concerns" (Cao et al., 2021, p.856).

The cost of goods can increase, or decrease based on the restriction of movement within regions. During COVID-19, movement was restricted for the entire supply chain, creating shortages, higher prices, and reduced income that created economic constraints (Alemu, A., 2021). When prices increase, the consumer's ability to purchase products will decrease, and they will seek out products of convenience. Organizations must consider that as the prices rise, the quantity of demand decreases. Most consumers are price-sensitive regarding the products on hand (Bissinger, K., 2019).

Value of Price

 

           Customers value referral programs and promotions that reduce the price of products. Marketing teams must identify the proper promotion with product prices as customers can also take this price reduction as poor quality of goods. When accessibility to products declines and prices increase, this will negatively affect the prices and convenience of products. If the years are many, you shall increase the price, and if the years are few, you shall reduce the price, for it is the number of the crops that he is selling to you (HolyBible, Loveticus 26:16). Loyal customers will return by providing them with quality goods that are sold at a rate that customers can afford. Branding plays a significant role in price-setting behavior. Marketing strategies must be considered when deciding on a product price as this can influence the consumer's decision to purchase a product, and they must understand the customer's needs and desires. 

Coffee Price

 

           The price of coffee has two separate costs: the first is the cost of the product as it is received, and then the international price for coffee delivered at the point of entry. Exported coffee will be higher as it will include the exportation fee. In 1998, five organizations that determined the price of coffee owned two-thirds of the world's coffee. "Market concentration could weaken coffee-producing countries' ability to influence international prices so that the cost can be passed on to retail prices (Ghoshray & Mohan, 2021).

 

Conclusion

 

Loyal customers are essential for the success of the business and product. Marketing teams must find the right balance of product quality and price that retains loyal customers. Loyal customers will generate word of mouth that will assist the organization's advertising strategy, which will reduce advertising costs. The right mix will also help the business generate more online and brick-and-mortar sales.

References

Alemu, A. (2021). Effect of covid 19 pandemic on marketing activity (price of convenience and

shopping goods) in bench sheko zone, southwest ethiopia.  Academy of Marketing Studies

Journal, 25(6), 1-9.

Bissinger, K. (2019). Sustainability labels: Are price premia relevant in online food

retailing?  Journal of International Food & Agribusiness Marketing, 31(3), 255-

272.  https://doi.org/10.1080/08974438.2018.1520177

Cao, Z., Chu, J., Hui, K., & Xu, H. (2021). The relationship between online referral marketing

and price promotion: Evidence from a large E-commerce platform.  Journal of

Management Information Systems, 38(3), 855-

888.  https://doi.org/10.1080/07421222.2021.1962597

Ghoshray, A., & Mohan, S. (2021). Coffee price dynamics: An analysis of the retail-international

price margin.  European Review of Agricultural Economics, 48(4), 983-

1006.  https://doi.org/10.1093/erae/jbab027

Holy Bible (2023). The Holy Bible, Loveticus 26:16. https://esv.literalword.com/

Rivanni, C. E., Zamili, A. S., Yosephine, D. I., & Situmeang, R. R. (2021). The influence of

price, marketing strategy, and creativity on purchase decisions at PT. terbit terang

medan.  Kontigensi, 9(1), 194-207.  https://doi.org/10.56457/jimk.v9i1.143