Pricing Method, Market, and Marketing
Introduction
Every business is finding innovative ways on how to increase the demand on their products and how to fill the missing gaps of their consumer loyalty. Different strategies are being implemented but there are only few recognized benefits. However, the firms that did not cease to encourage their people and system to improve will soon realize the progress. On when or how is the remaining question.
Customer-Based Pricing System and Comparison on Cost-Based Pricing Method
Pricing methods are applied by the firms in a tactical way where they can easily matched their competitors and accommodate the profitability (Harmon, Raffo, and Faulk, 2005; AARD, 2009). The customer-based pricing is also called value-based pricing method is applied by most of the firms to estimate the market value of the products as much as its various developments. The commitment of a customer-based approach in pricing is mostly on the development of the long-term pricing capital and creating long-term value for the customer. From its word, the pricing method is entirely based on the customer’s perceptions and focusing on capturing the value from a market segment. Firms invest in strategic planning can make better product decisions and development of the process by understanding how customers value their products, the alternatives or substitutes, and their buying behaviors (Harmon, Raffo, and Faulk, 2005). Albeit the customer-based pricing delivers the benefits in the companies, there are noted advantages such as the production costs and the pressures from the competitors may affect the pricing strategy. To implement its effectiveness, the firm should decide how to deliver the products, have value on discounts and other strategies (AARD, 2009).
In the comparison of the customer-based pricing to cost-based pricing method, there are obvious differences. Cost-based approaches place the interests of the sellers over the interest of the buyer. The use of the cost-based system slows the raise of prices even if the profit and volume goals are already met (Harmon, Raffo, and Faulk, 2005). Cost-based pricing particularly based on the ingredients and cost of operation. Also, this includes the raw materials, transportation, advertising, wages, rent, and cost of the suppliers. Firms that applied the cost-based pricing ensure the accuracy because of the involvement of cash. However, same as the customer-based approach, the cost-based approach also recognize the disadvantages. It does not consider the customer demands and how its affects the prices and the existence of the competition have a significant effect especially when there are close substitutes (AARD, 2009).
Market Segmentation
In the industry of construction and mining, the companies that involved in the nature of work have limitations in application of the segmentation criteria. Most of the business transactions in mining and construction industry are planned and with proper timing for operation. In contrast, the companies are not using too much marketing strategies and the outputs are not subjected in low prices. Because they value most of the resources, operational cost, labor, machineries, and other related works, companies are using the cost-based approach. This type of approach help the companies to evaluate the worth of their finish output, including the materials and other requirements to finish the project and profits from the interest, all are added and subjected as the total cost.
Marketing and IT
In the traditional marketing perspective, the goal to achieve the success starts in determining on what would be the applicable pricing strategy of the company. The company will recognize the success through the return of the investment and meeting the profits (Harmon, Raffo, and Faulk, 2005). To fulfill all of these traits, the aid of marketing is needed. In the introduction of the technology, different organization that acquired appropriate technology, experience it efficiency. Because of the influence of the technology, sometimes the companies are competing on the process on how they created a product. In its application in the marketing, information can provide aid in the strategic direction of the business’s market. Different approaches are finally introduced to fulfill the philosophy of marketing. In the market, the value of the flyers, brochures, poster, or catalogues are decreasing because of the interactive campaign of most of the marketers (ANA, 2008). The mind-setting of the business leaders is on how to accommodate the customers and the potential customers in an easy way. The massive influence of the marketing already ruled over the internet or websites, online ordering (if the company is offering the kind of customer service), information provider and so on.
Conclusion
Organizations must learn to balance the different aspect of the creation of business. On the other hand, the business should close its doors for other opportunities that might lead them to success. Sometimes, too much anxiety kills and the leaders might miss their chances.
References:
AARD, 2009. Methods to Price Your Product, Agri-Facts. Alberta Agriculture and Rural Development. [Online] Available at: http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/agdex1133/$file/845-2.pdf?OpenElement. [Accessed 11 Feb 2010].
ANA, 2008. The Continuously Changing Role of Marketing, Association of National Advertisers. [Online] Available at: www.ana.net/committees/getfile/1486. [Accessed 11 Feb 2010].
Harmon, R., Raffo, D., & Faulk, S., 2005. Value-Based Pricing for New Software Products: Strategy Insights for Developers. [Online] Available at: http://cpd.ogi.edu/MST/CapstoneSPR2005/VBSP.pdf. [Accessed 11 Feb 2010].
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