To understand the price strategies of an enterprise,start with the study of market types and the rules of their existence. Without knowledge of the general picture of global and local economic processes, it is not so easy to understand why one or the other way of forming the value of a commodity is suitable in this particular case. Pricing strategies in marketing can also be selected based on the category of the proposed product. For example, the cost of goods from the luxury segment can depend only on the financial capabilities of the target audience. The same applies to some other groups of products and services.
Types of markets
Proper organization of your placein modern monetary relations can become a starting point to the heights of success. It is because of this that it is important to be able to segment segments by the presence of competitors and their capabilities.
In the modern economic environment, there are four main types of markets:
- Pure competition.In this case, there are an infinite number of manufacturers on the market. As a rule, consumers have to choose from similar but differentiated trade offers. Complexities with access to such a market in the organization does not arise, care will also not be difficult, and each individual firm can not have a significant impact on the price level.
- Monopolistic competition.There are many manufacturers on the market, and consumers choose from similar products or services. In this case, each organization seeks to create a unique trade proposal through design, options, service, longer warranty period, etc. The impact that a single company can have on the price strategy of the entire market is minimal.
- Oligopolistic competition.Traditionally, there are up to six large manufacturing companies on the market. It is extremely difficult for other firms to enter the market due to difficulties or inability to access raw materials and technical facilities, skilled workers, and the availability of necessary patents for oligopolists. Representatives of this type of market competition can work both separately and be united in concerns. Prices for goods are completely dependent on policy and objectives.
- A market without competition or a monopolistic market.There is only one manufacturer on the market. Most often, this narrowly specialized production, as a rule, is expensive. Prices are completely dictated by a single market participant, but they can be controlled by the state.
Pricing: pricing strategies
Firms entering the market can choose differentways of becoming, therefore they will give preference to those ways of formation of value which are more suitable in their situation. In view of this, it is common to distinguish six basic types of pricing. A separate category also includes ways to determine the cost of a new product or product after a rebranding.
What will be the main for the company?Of course, to ensure the survival of both the product and the company itself. Without following this basic goal, it is unlikely to lead the enterprise to success. This task immediately underlines the company's understanding of the fact of having competitors, similar or even similar products and the need to exert maximum effort.
Most often, products and services arenon-unique, because there are many other producers of this product, and, therefore, the choice of price strategy may be due to a decline in demand. In this case, only a low and more attractive price will help the company to maintain its place in the market. Speech about the profit in this case does not go.
Many companies are trying in a short period of timetime to achieve grandiose results. They set the maximum possible price for the goods. However, it is forgotten that it is important to assess the real demand for products or services, as well as take into account all associated costs (logistics, packaging, storage, etc.). Such inflated prices are held for as long as possible. In this case, the effect of novelty or uniqueness of the product is affected. But as a result of such a price strategy, you can get undesirable consequences: undermining the business image, lack of a long-term perspective, the outflow of customers, the lack of repeat purchases, and so on.
So that the company could easily be a legislator"Fashion" needs to come out on top in the rating of consumer demand. To do this, you need to win the largest share of the market. And this, in turn, will require the attraction of a huge number of customers, who at the same time must become regular buyers or users (in the case of services).
The easiest way to attract attention -carrying out of actions, reduction of the price, delivery of gifts and bonuses at purchase. Such a goal is long-term, but you can forget about big profits at the initial stages.
As you know, a twofold increase in production leadsto reduce costs by at least 20% from one unit of goods. Therefore, the more you need to produce goods, the cheaper it will cost to create it for the company, which means that the profit will also grow by 20-30%.
Quality of goods as a way to leadership
For firms with long-term plans, developmentThe price strategy is determined by other factors. Their main task is to create the highest quality goods. This is not an easy task. They are forced to create goods at the lowest price in the largest possible amount while maintaining the proper quality.
The "reliability" factor can become a keymany consumers when choosing a particular product. To justify the high cost in this case can be exceptional quality or additional options. This will cover all technical costs. Goods from this price category are in great demand. Buyers are willing to pay more for the product, which they will be sure of. Such goods and services are also often becoming popular due to "word of mouth".
Expansion of the number of distribution channels
If it is necessary to attract newbuyers with a change in the distribution market, for example, with the expansion of the company's product range, the main task will be an attempt to achieve location and loyalty at an attractive price.
This goal is the most difficult because of thedifficulties with finding balance. After all, too low a price can cause unnecessary questions about the quality of the goods, and too high to lead to the unreadiness of consumers to give money for an unknown product.
This price strategy should be verycompetently filed. Interest in goods with the original high price can be caused by discounts. More cheap products and services should be made slightly more expensive, but offer all buyers a pleasant bonus.
In many ways, such a strategy is considered universaland profitable. First, when the season of bonuses and discounts ends, the number of people who have stopped buying this product will decrease slightly. Secondly, it can raise the cost of cheaper products.
Return on Investment
Each company invests money in production. Often they also have to attract third-party investors or take loans. Therefore, when choosing the optimal price of the goods, the amount that was spent for reproduction is taken into account, and then a percentage is added to the final cost, which in time will cover all costs. In this case, the firm will not remain bankrupt and will not go into negative, even if it can not work for the future.
This strategy does not fit certain categoriescompanies with high technological costs, as an attempt to return investments will make the goods too expensive. In addition, when choosing this strategy of price policy, customers' expectations are not taken into account, and this can have a negative impact in the future.
The withdrawal of a new product and the formation of its value
If the company tries to surprise customers with a novelty,especially if the enterprise itself is little known to the general public, it is advisable to apply other types of price strategies. Not always people willingly take a novelty, even if it is really high-quality and worthwhile. Habits play a huge role in consumer behavior. Therefore, in this case, a number of other factors may influence the final choice of the pricing policy.
Which enterprise does not want to get everything andright away? This position is called "skimming the cream from the market." The purpose of this pricing strategy of the enterprise is to make profit in the segment of the market that agrees to buy this product at a fixed price. The cost of such a product is usually overestimated by 30-40%, since anyone willing to buy it is ready to pay this money. Even if there is a similar or similar product on the market with a lower price that attracts the average static consumer, this strategy takes into account only brand loyalty and readiness to purchase the product.
For this strategy, you do not need to producemass goods, since even small production loads will bring the expected profit. Since the time when saturation of the market and consumers with goods begins, the price falls lower, usually to the average market. Due to this, more people are interested in the product, which again leads to an increase in the price. Such a strategy can be used until the demand curve returns to the standard for this product in the selected market segment.
The conditions for a positive result of this strategy:
- high quality of the goods;
- notable brand image;
- the market segment differs by a small number of competitors;
- absence of a large number of similar products with a lower price.
Implementation and consolidation
The strategy of penetration and lasting implementationhas a long-term character. The interest of the manufacturer is based on the achievement of prestige and a positive image of the enterprise. In this case, the price of the goods at the time of entering the market should be slightly lower than that of the nearest competitors.
The main attraction tool is the product itself, but for a more pleasant average customer price. In addition, the task of finding regular customers should be solved.
Positive results of this price strategy on the market:
- reduction of costs;
- growth in production volumes;
- low price stops new companies from bringing a similar product to the market;
- expansion of sales markets.
Costs and profits
The golden formula for success in trading looks like this: "Average costs + profit." This strategy is followed by many modern manufacturing companies. The essence of this approach is to choose a margin that will completely cover all costs, but at the same time it will bring profit. The price in this case should be balanced. Too low or too high cost will not allow you to reach the required volume of production and marketing. This strategy is used for both novelties and "stale" products.
"Following the Leader"
Many small enterprisesadjust to the trends that form larger companies. The same applies to pricing. Small firms are forced to either keep the value of their products at the price level of large organizations, or set it at 15-30% lower to attract attention.
When choosing this strategy, small companies can simply "follow their big brother", which will help them save money on marketing research, for example.
Adjusted for prestige
There is a separate category of goods - luxury goodsproducts. Form the price for such a product can be practically "from the ceiling." This strategy applies to exclusive, high-quality products, and / or possibly, manual manufacturing. Properties and characteristics should appear "higher" than the established price. In this case, the goods will be popular.