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Liberty University
MMIP6
BUSI520
Holly Keith
January 22, 2024
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Week 6 MMIP
Introduction
This following paper will dive deep into Buff City Soap’s pricing strategy, tactics, and
distribution channels. A company’s pricing strategy is one of the main factors that consumers use
to base their purchases on. Not only is affordability important, but also attainability. In the world
today, companies must be competitive with pricing and distribution to reach more customers.
International trade has created more opportunities for businesses to sell products, but it is up to
the individual company to choose how they sell their products.
Pricing Strategy
The pricing strategy that Buff City Soap implements is the price skimming strategy. Due
to the unique nature of the products, they can sell them for a premium price and customers will
pay for it because they believe that the quality matches the price. Using a price skimming
strategy can be beneficial to niche markets because the consumer base is smaller (Marshall &
Johnston, 2023, p. 297). Buff City Soap specializes in handmade plant-based products which
means that direct competition is limited. The “novelty factor” of these products makes this the
appropriate strategy (Melser & Syed, 2016, p. 523). Buff City Soap would lose money if they did
not sell their products at a premium because everything is made locally and is grown naturally.
Pricing Tactics that Stimulate Sales
Buff City Soap uses prestige tactics to stimulate their sales. This is optimal when
brands market the quality of their products because people associate higher quality with a higher
price. One of the best opportunities a business can take advantage of is a price bundling strategy.
While price bundling is commonly used with technology, other businesses can use this tactic to
their advantage. A price bundling strategy takes multiple products, puts them together and then
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applies a discount. The goal of this tactic is to persuade customers to buy more products than
they would have without the bundle. While this might not be a good option in the long term to
stimulate sales, a company can use this tactic around holidays and summer vacations to increase
their revenue.
Distribution Used
Buff City Soap has an indirect channel of distribution. Some of their products are
manufactured, but they must source their plant-based ingredients for their bar soaps. The
manufacturer provides the resources and some of the pre-packaged products and then the retailer
makes bar soaps and sells them directly to customers. This distribution channel cuts a lot of time
and money that would be used if there were more intermediaries.
Distribution Strategy Used
The distribution strategy that Buff City Soap uses is exclusive distribution. Buff City
Soap is an entity on its own and it does not distribute products to other vendors. The only place
that their products can be found is online and in Buff City Soap stores. This creates an exclusive
experience for customers in the store because there is a level of scarcity regarding the products.
The prestige and price premium also contribute to this distribution strategy (Marshall &
Johnston, 2023, p. 331).
Firms Use of e-Channels
Buff City Soap utilizes e-retailing as a channel of sale. The online customer experience
produces outcomes such as “satisfaction, trust, and repurchase intention” (Rose et al., 2012, p.
312). The quality of products ordered online may be slightly different than those in the store
because of the ingredients in the products. However, the ability to order online makes the brand
more inclusive to people without direct access to a store. One way in which Buff City Soap can
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improve its current methods is to create an app for phones. Apps can increase sales because an
order is only a click away.
Conclusion
Buff City Soap has generated billions of dollars in revenue and their pricing strategy and
distribution channels have been some of the reasons why. The methods they use are effective
because they know what their brand represents. Buff City Soap is not a luxury brand, but they
are more specialized than a generic brand. It is important that a company recognize the quality of
their products and then price and distribute accordingly.
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References
Marshall, G. W., & Johnston, M. W. (2023).@Marketing management(4th@ed.). McGraw-Hill.
ISBN 978-1-260-38191-7 Available via CONNECT.
Melser, D., & Syed, I. A. (2016). Life cycle price trends and product replacement: implications
for the measurement of inflation. Review of Income and Wealth, 62(3), 509-533.
DOI: 10.1111/roiw.12166
Rose, S., Clark, M., Samouel, P., Hair, N. (2012). Online customer experience in e-retailing: an
empirical model of antecedents and outcomes. Journal of Retailing, 88(2), 308-322.
https://doi.org/10.1016/j.jretai.2012.03.001
