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Outline three pricing strategies a marketing manager could consider in setting a selling price for a product or service - Leaving Cert Business - Question B - 2017
Question B
Outline three pricing strategies a marketing manager could consider in setting a selling price for a product or service. Name one pricing strategy suitable for a pr... show full transcript
Worked Solution & Example Answer:Outline three pricing strategies a marketing manager could consider in setting a selling price for a product or service - Leaving Cert Business - Question B - 2017
Step 1
Outline three pricing strategies a marketing manager could consider in setting a selling price for a product or service.
Answer
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Premium Pricing: This strategy involves setting a high price to reflect the consumer's perception of a superior product. It is often used by businesses offering unique products (e.g., bespoke items or luxury brands). By emphasizing marketing and promotion, the product's perceived value justifies its high price.
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Penetration Pricing: This approach sets the price lower than competitors to enter a market and gain market share. It is effective for products with competition where initially low prices attract customers, increasing profits gradually as awareness and loyalty build over time.
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Psychology Pricing: This pricing strategy plays on emotional triggers. Prices are often set just below a round number (e.g., 10) to create an impression of a better deal. This can significantly influence consumer perception and demand.
Step 2
Name one pricing strategy suitable for a product or service of your choice, explaining the reason for your choice of pricing strategy.
Answer
One suitable pricing strategy is Bundle Pricing. This involves offering several products or services together at a lower price than if they were purchased individually. For example, a telecommunications company might sell a package of internet, phone, and TV services at a discount. The reason for this strategy is that it provides customers with perceived savings and increases overall sales volume by encouraging the purchase of multiple items, enhancing customer satisfaction through convenience.