marketing- due in 3 hours
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pricing_0_1.docxRunning head: PRICING 1
PRICING 2
Pricing
Student’s Name
Institution
Pricing
Pricing is crucial for our product since it forms the basis for all our earnings and also determines the demand of the product by our customers. While designing our pricing strategy, we must consider the cost of production, as well as rival prices (Furtwengler, 2010). Deciding on the ultimate price for our product is essential so we can publicly inform our buyers. The price must put in place all the expenses and the designated profits. A price catering for all the set wants is most effective and should be the price for the Perfect Stitch T-shirts.
Our price setting strategy majors around the profit-making concern of our company. The price of our commodities must cater for the expenses incurred during the production of Perfect Stitch T-shirts. On to that, the price must account for any distribution costs, and still offer enough profits to the organization. Based on our rival companies’ prices, we must keenly consider all factors to ensure that the price matches the wants of our consumers. The price setting has been assessed and made in the following calculations.
Type of Competition
Our company, Perfect Stitch, competes in a monopolistic type of competition. Here, all companies produce relatively a similar product (associated with the garment industry), though in different designs, forms and material. However, the purpose remains the same, that of clothing. There is no dominant competitor in the industry, and all companies compete favorably, facing no stiff competition from either of the rivals. We as an organization believe that we are the best in terms of quality and pricing. Our price matches our quality, and of course, cheap is expensive. We cannot assure our customers that we will offer the cheapest price for our products, since the cost incurred far exceeds other product’s prices. However, our price matches the quality, and is relatively cheap compared to garment’s value (Lederer & Li, 1997).
( P R I C E ) ( Quantity ) ( Perfect Stitch demand curve )
The shift in the demand curve proves an increase in demand, signifying an increase in the price of the commodity. The price increases with increase in demand.
Based on competitors’ prices, we can assess our performance in the market. The rival of substitute products determines the market share of our products. Therefore, to outdo competition, we must come up with effective measures to strategic plan to outdo competition and dominate the garment industry. We must compete favorably against our competitors to ensure that we maintain a larger portion of the overall market for clothing. With effective measures in place, we can outdo all competition and maximize profits through increment in market stake (Lederer & Li, 1997).
( 20 42 15 35 26 Prices ($) )
Based on the bar graph results, the competitive price lies in between 15$ and 26$. Our price must therefore be between these two ranges to ensure that we remain highly competitive and dominant in the industry. Prices above or below this range are out of the competitive bracket, and setting any of them as our ultimate selling prices poses major threats to our sales. Based on this price, our products can be easily priced and retain maximum market dominance and competitiveness.
Our price development strategy involves pricing our product at the average provided, which will help us maximize profits and at the same time retain our customers (Furtwengler, 2010). With constant amendments, we can alter our price and set it to match the current market and demand. Changes in demand will result to adjustment of the price, where increment results to increase, and vice-versa. This will ensure that our products remain highly competitive, and better our image as a company, as well as ensuring stability of our organization.
References
Furtwengler, D. (2010). Pricing for profit: How to command higher prices for your products and services. New York: American Management Association.
Y-Values 140 300 500 800 40 25 15 7 Quantity Supplied Perfect Stitch Rival A Rival B Rival C Rival D 390 300 480 250 600
