Basic strategies and methods of pricing in the marketing - review description and features

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2019-06-13 16:00:37

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Market Conditions force employers to pay more attention to marketing theory. Their application in practice allows the company to be competitive and build a proper development strategy.

Main strategies and methods of pricing in marketing: an overview, description and features

One of the primary objectives of marketing – studying and clarifying customer requirements. The findings will help to develop the product that most satisfies the client and ensures the profitability of the business.

Another priority – focus on the product. Market research, competitors, and their role in addressing the needs of the client helps to improve the properties of the goods, and win the fight for the wallets, the hearts and minds of customers.

The General Economic approach, in which the price of goods is determined on the basis of cost and expected profit may not be effective in all cases. Furthermore, the use of only this approach is disastrous if there are other similar proposals. Under such circumstances, the need arises to consider a separate branch of marketing – pricing methods in marketing.

What methods are there?

Overall, there are 6 ways, 2 of which focused on the cost of production of goods and other 4 – taking into account market factors.

Which is useful if the new product? When establishing the value of a new product should take into account the principles of enterprise management. In any case, one criterion remains the same – the price of the product should provide the maximum level of potential revenue for the company.

The Below described methods have individual characteristics. At the same time each of them is not without drawbacks. The company must make a decision about using one or the other method.

There are many ways of determining optimal prices for a product

Costly ways of determining the cost of products

Pricing Methods in marketing taking into account the cost involve determining the final cost by adding the sum of production costs and the amount of the expected profits of the company. A vivid example – the full method costs.

To obtain the factor required to determine the amount of variable and fixed costs. Next you should add the level of expected profit. The following paragraph refers to the number of products that you want to share on previous performance.

Selecting a pricing method in marketing in such a simple way widely used by many Russian companies. There are several weighty arguments:

  • The Firm is easier to obtain information about its own costs than on the needs of consumers.
  • Price competition will be lower, even if competitors use this method.
  • Easy to determine the minimal marker value of the product.
  • Implementation on the price to compensate for production costs.
  • Provides a standard of expected profits.

For objectivity it is important to mention the disadvantages. Chief among them – the company will have no incentive to lower costs. The other side – competition remains unaccounted for, which gives a chance to use this space to competitors in their favor by offering the same goods at a lower price. From this we can say that this method is suitable for those industries where minor competition.

New item can move on the method "collection cream"

Method marginal costs

Pricing Methods in marketing involve the use of the criterion of the marginal costs. Take into account the following initial data:

  • The maximum amount of production costs.
  • Return of the goods in terms of%.
  • The value of the goods.

The Calculation is simple: define variable costs per unit of product, to them are added the factors covering these costs, plus normal profits.

Accounting for direct costs

Methods marketing pricing as a tool determining the optimal value of the goods offer another method: variable cost-plus profit margins on each unit of production. The question arises about accounting of the fixed costs. This article will be included in the amount that arises during the implementation minus the total variable costs.

Method relative to ROI

The list of basic pricing methods in marketing are considered and investments in the production of goods. It is important to remember that marketing takes into account not only the amountinvestment and return amount. Any investment involves the purpose of receiving the dividend. That is definitely the refund amount must be greater than the amount invested.

The same rule applies to domestic investment, that is, when a company invests in marketing campaigns and actions. Thus, the company intends to increase the level of their income. These values should be reflected in the cost of goods.

the orientation of the product is not always a successful strategy

In marketing, there is a special formula to calculate the amount of investment return. According to her calculations are performed in the following order:

  1. The Amount of investments.
  2. Revenue.
  3. The Total amount of gross profit and production costs.
  4. Amount of investment return and the amount of coverage investment.

Subtracting the second paragraph of the cost of goods sold and the amount of coating of investments, find the amount of the refund.

Method for the determination of the target value

With this method in the calculation base is the cost of the product based on the projected sales. However, this method has a significant drawback-it does not take into account the needs and capabilities of consumers, and focuses on the interests of the entrepreneur. In conditions of high competition, the application of this method may not meet the expectations of the company and Vice versa, can lead to stagnation of the product.

Method extra cost

Strategies and methods of pricing in marketing include a variety of approaches. One of them – the multiplication of the acquisition and the sale of goods at a special multiplying factor. For the company this method is advantageous in that does not require the cost of a study on the demand, as it in this case does not matter.

the Strategy of low prices is justified economically

In General, pricing methods in marketing is briefly divided into two types: a reference to consumer demand and a focus on value. The surcharge technique belongs to the second type.

When promoting such products need to know not demand, and understanding the consumer about the product, its value and approximate the amount a customer is willing to pay for it. Based on these data to marketing the company will use non-price methods of influence on the customer, aimed at creating a certain image of the product.

In this approach, the company's costs are the only economic limit below which it is impossible to lower the value of the goods. However, there are cases of dumping. The aim of ousting competitors from the market and can be used as a temporary strategy. In the long term, this method is not justified, as the value of goods at a high price categories is the high cost.

A Vivid example of a similar marketing move – the cost of a Cup of coffee in the diner and the restaurant. As the analysis methods and pricing strategies in marketing, in the second case, the consumer is willing to pay several times more only for a special atmosphere.

Market methods of price determination

This section of the marketing has three main methods:

  1. Focus on consumers.
  2. Orientation on the strategy of competitive companies.
  3. Normative-parametric approach.

The First type of methods is divided into the following types:

  • The Estimate of the maximum acceptable value.
  • Orientation on demand.
  • Analysis limits.
Company free pricing

The Main methods of pricing in marketing by targeting the competitors assume the following subtypes:

  • Focus on price leader in the market.
  • Based On the usual buyers of prices.
  • The Tender type.
  • Method of auction.
  • A Reference to the market price.

The Normative-parametric approach involves the following calculation types:

  • Method of specific indicators.
  • Aggregate method.
  • Regression analysis.
  • Scoring method.

The Importance of pricing in marketing for each company individually. It is absolutely free in his choice. But there are factors that must be considered when pricing. One of the essential – it is the life cycle of the product. If he had long known and has its place in the market, the applicable sliding, flexible, pre-emptive or consumer methods.

The New products will be successful, if we apply a method called "skimming", a reference to the leader, psychological techniques or the method of market penetration.

Practice in Russia

The Entrepreneur is entitled to charge a price, using any available method of pricing. In General two approaches to pricing: determination of individual prices and the installation of a single value.

The pricing Process – the only marketing measure that does not require monetary investments. But at the same time, experts believe that the pricing policy of many companies not sufficiently developed and there are significant shortcomings. The most frequent errors:

  • Lack of adjustment of prices to changing market conditions.
  • Excessive updating on costs ineducation prices.
  • Prices are not tied to other marketing elements.
  • The Prices are not differentiated according to the line of products.

The Most advantageous position is the price of innovation. As you know, the product, the simulator can not boast of freedom in choosing the prices. In contrast, innovative products can afford to use the tactics of "skimming" of penetration in the market or a benchmark on the value of the goods.

the High prices are based on the psychological methods of promotion

Wondering what there are methods of marketing pricing, particularly noteworthy are the popular pricing – strategy of low prices. This method is universal. It pursues several objectives: the rapid introduction into the market, crowding out competitors ' products and expanding sales areas. Usually after the full implementation of the product in the market is the revision of the pricing policy. Here two variants are possible: the use of other trust policies, which increase the cost of goods, or increase profits through sales. Following this logic, the application of the strategy of low prices is economically justified.

In some cases, it is possible to apply low price?

While the implementation of the strategy of low prices should take into account some external parameters:

  • The Market is sensitive to price changes.
  • Increasing the volume of realization of production costs should have a downward trend.
  • The Presence of stiff competition in the market.

The Presence of such factors in the field of activity of the company is guaranteed to lead to the success of the strategy of low prices.

When can I sell more?

The Strategy of high prices is also justified in economic terms. But required certain conditions. First and foremost they relate to the product itself. It must be either new to the market, or to be protected by patents or are the result of high-tech processes.

From the market important conditions such as the formed image of the company or product, a sufficient number of the target audience, the higher the level of competitiveness and small production volumes.

After the product is on the market a strong position, the company can develop products in a lower price category. This is the extension of sales and profit growth.

Successful pricing is an important business tool

Conclusion

It is considered that the product will bring a profit if the final cost covers all costs for its production. It's too General statement. But the potential of each market is much deeper. To recognize and put into action marketing methods to help. And their skilful use of the – half the success for any company.

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