Generic Pricing Strategies: Pricing is one of the most important elements of the marketing mix, as it is the only mix, which generates a turnover for the organisation. The remaining 3p’s are the variable cost for the organisation. It costs to produce and design a product, it costs to distribute a product and costs to promote it. Price must support these elements of the mix. Pricing is difficult and must reflect supply and demand relationship. Pricing a product too high or too low could mean a loss of sales for the organisation. Pricing should take into account the following factors: 1. Fixed and variable costs. 2. Competition 3. Company objectives 4. Proposed positioning strategies. 5. Target group and willingness to pay. Pricing Strategy Definition Example Penetration pricing: Here the organisation sets a low price to increase sales and market share. Once market share has been captured the firm may well then increase their price. A television satellite company sets a low price to get subscribers then increases the price as their customer base increases. Skimming pricing: The organisation sets an initial high price and then slowly lowers the price to make the product available to a wider market. The objective is to skim profits of the market layer by layer. A games console company reduces the price of their console over 5 years, charging a premium at launch and lowest price near the end of its life cycle. Competition pricing Setting a price in comparison with competitors. Really a firm has three options and these are to price lower, price the same or price higher Some firms offer a price matching service to match what their competitors are offering. Product Line Pricing: Pricing different products within the same product range at different price points. An example would be a DVD manufacturer offering different DVD recorders with different features at different prices eg A HD and non HD version.. The greater the features and the benefit obtained the greater the consumer will pay. This form of price discrimination assists the company in maximising turnover and profits. Bundle Pricing: The organisation bundles a group of products at a reduced price. Common methods are buy one and get one free promotions or BOGOF's as they are now known. Within the UK some firms are now moving into the realms of buy one get two free can we call this BOGTF i wonder? This strategy is very popular with supermarkets who often offer BOGOF strategies. Psychological pricing: The seller here will consider the psychology of price and the positioning of price within the market place The seller will therefore charge 99p instead £1 or $199 instead of $200. The reason why this methods work, is because buyers will still say they purchased their product under £200 pounds or dollars, even thought it was a pound or dollar away. My favourite pricing strategy. Premium pricing The price set is high to reflect the exclusiveness of the product. An example of products u.

1. Generic Pricing Strategies:
Pricing is one of the most important elements of the marketing
mix, as it is the only mix, which generates a turnover for the
organisation. The remaining 3p’s are the variable cost for the
organisation. It costs to produce and design a product, it costs
to distribute a product and costs to promote it. Price must
support these elements of the mix. Pricing is difficult and must
reflect supply and demand relationship. Pricing a product too
high or too low could mean a loss of sales for the organisation.
Pricing should take into account the following factors:
1. Fixed and variable costs.
2. Competition
3. Company objectives
4. Proposed positioning strategies.
5. Target group and willingness to pay.
Pricing Strategy
Definition
Example
Penetration pricing:
Here the organisation sets a low price to increase sales and
market share. Once market share has been captured the firm
may well then increase their price.
A television satellite company sets a low price to get
subscribers then increases the price as their customer base
increases.
Skimming pricing:
The organisation sets an initial high price and then slowly
lowers the price to make the product available to a wider
market. The objective is to skim profits of the market layer by
layer.

2. A games console company reduces the price of their console
over 5 years, charging a premium at launch and lowest price
near the end of its life cycle.
Competition pricing
Setting a price in comparison with competitors. Really a firm
has three options and these are to price lower, price the same or
price higher
Some firms offer a price matching service to match what their
competitors are offering.
Product Line Pricing:
Pricing different products within the same product range at
different price points.
An example would be a DVD manufacturer offering different
DVD recorders with different features at different prices eg A
HD and non HD version.. The greater the features and the
benefit obtained the greater the consumer will pay. This form of
price discrimination assists the company in maximising turnover
and profits.
Bundle Pricing:
The organisation bundles a group of products at a reduced price.
Common methods are buy one and get one free promotions or
BOGOF's as they are now known. Within the UK some firms are
now moving into the realms of buy one get two free can we call
this BOGTF i wonder?
This strategy is very popular with supermarkets who often offer
BOGOF strategies.
Psychological pricing:
The seller here will consider the psychology of price and the
positioning of price within the market place
The seller will therefore charge 99p instead £1 or $199 instead
of $200. The reason why this methods work, is because buyers
will still say they purchased their product under £200 pounds or

3. dollars, even thought it was a pound or dollar away. My
favourite pricing strategy.
Premium pricing
The price set is high to reflect the exclusiveness of the product.
An example of products using this strategy would be Harrods,
first class airline services, Porsche etc.
Optional pricing:
The organisation sells optional extras along with the product to
maximise its turnover. T
This strategy is used commonly within the car industry as i
found out when purchasing my car.
Cost Based Pricing:
The firms takes into account the cost of production and
distribution, they then decide on a mark up which they would
like for profit to come to their final pricing decision.
If a firm operates in a very volatile industry, where costs are
changing regularly no set price can be set, therefore the firm
will decide on their mark up to confirm their pricing decision.
Cost Plus Pricing:
Here the firm add a percentage to costs as profit margin to come
to their final pricing decisions.
For example it may cost £100 to produce a widget and the firm
add 20% as a profit margin so the selling price would be
£120.00
Source: http://www.learnmarketing.net/price.htm
Source:
http://www.marketingmo.com/strategic-planning/how-to-
develop-your-distribution-channels/

4. Distribution, also known as placement, is one of the classic “4
Ps” of marketing (product, promotion, price, placement a.k.a.
“distribution”). Distribution channels play a key role in your
entire marketing strategy — they help you expand your reach to
penetrate your market.
B2B and B2C companies can sell through a single channel or
through multiple channels that may include:
· Direct/Internet: Selling through your own e-commerce
website.
· Direct/Sales Team: One or more sales teams that you employ
directly. You may use multiple teams that specialize in different
products or customer segments.
· Direct/Catalog: Selling through your own catalog.
· Retail: Retailers sell directly to end-users via a physical store,
a website or a catalog.
· Wholesaler/Distributor: A company that buys products in bulk
from many manufacturers and then resells smaller volumes to
resellers or retailers.
· Value-Added Reseller (VAR): A VAR works with end-users to
provide custom solutions that may include multiple products
and services from different manufacturers.
· Consultant: A consultant develops relationships with
companies and provides various types of services; they may
recommend a manufacturer’s product or simply purchase it to
deliver a solution to their client.
· Dealer: A company or person who buys inventory from either
a manufacturer or a distributor, then resells it to an end-user.
· Sales Agent/Manufacturer’s Rep: You can outsource your
sales function to a company that sells different manufacturers’
products to a group of similar customers in a specific territory.
Here are three distribution examples:
DIRECT TO END USERS
SELL THROUGH A DEALER NETWORK
SELL THROUGH A VAR (VALUE-ADDED RESELLER)
You have a sales team that sells directly to Fortune 100

5. companies.
You have a second product line for small businesses. Instead of
using your sales team, you sell this line directly to end-users
through your website and marketing campaigns.
You have two markets and two distribution channels.
You sell a product through a geographical network of dealers
who sell to end-users in their areas. The dealers may service the
product as well.
Your dealers are essentially your customers, and you have a
strong program to train and support them with marketing
campaigns and materials.
You sell a product to a company who bundles it with services or
other products and resells it. That company is called a Value
Added Reseller (VAR) because it adds value to your product.
A VAR may work with an end-user to determine the right
products and configurations, and then implement a system that
includes your product.
To create a good distribution program, focus on the needs of
your end-users.
· If users need personalized service, you can utilize a local
dealer network or reseller program to provide that service.
· If your users prefer to buy online, you can create an e-
commerce website and fulfillment system and sell direct; you
can also sell to another online retailer or distributor that can
offer your product on their own sites.
· You can build your own specialized sales team to prospect and
close deals directly with customers.
Wholesalers, resellers, retailers, consultants and agents already
have resources and relationships to quickly bring your product
to market. If you sell through these groups instead of (or in
addition to) selling direct, treat the entire channel as a group of
customers – and they are, since they’re buying your product and
reselling it. Understand their needs and deliver strong marketing
programs; you’ll maximize everyone’s revenue in the process.
Best Case
Neutral Case

6. Worst Case
You’ve used one or more distribution channels to grow your
revenue and market share more quickly than you would have
otherwise.
Your end-users get the information and service they need before
and after the sale.
If you reach your end-user through wholesalers, VARs or other
channel partners, you’ve created many successful marketing
programs to drive revenue through your channel and you’re
committed to their success.
You’re using one or more distribution channels with average
success.
You may not have as many channel partners as you’d like, but
your current system is working moderately well.
You devote resources to the program, but you wonder whether
you’d be better off building an alternative distribution method
— one that could help you grow more aggressively than you are
growing now.
You probably aren’t hitting your revenue goals because your
distribution strategy is in trouble.
With your current system, you may not be effectively reaching
your end-users; your prospects probably aren’t getting the
information and service they need to buy your product.
Your current system may also be difficult to manage. For
example, channel members may not sell at your suggested price;
they don’t follow up on leads you deliver; they don’t service the
product very well and you’re taking calls from angry customers.
Distribution Channels Key Concepts & Steps
Before you begin
Your distribution channels should support your positioning and
brand strategy. These methods of reaching your market should
be natural ways to access your market segments, and support the
experience that your brand delivers.
For example, if you’re selling a unique product that has little
competition and is considered “high-end,” you don’t want to be

7. carried in Walmart, where the majority of shoppers are looking
for low-priced products that they’re already familiar with.
Or, if you’re an enterprise software vendor, you should be
working with professional services firms who have deep
experience with complex enterprise software deployments, and
are a natural fit to engage with the types of companies that you
target.
You can evaluate a new distribution channel or improve your
channel marketing / management at any time. It’s especially
important to think about distribution when you’re going after a
new customer segment, releasing a new product, or looking for
ways to aggressively grow your business.
Evaluate how your end-users need to buy
Your distribution strategy should deliver the information and
service your prospects need. For each customer segment,
consider:
· How and where they prefer to buy
· Whether they need personalized education and training
· Whether they need additional products or services to be used
along with yours
· Whether your product needs to be customized or installed
· Whether your product needs to be serviced
Match end-user needs to a distribution strategy
· If your end-users need a great deal of information and service,
your company can deliver it directly through a sales force. You
can also build a channel of qualified resellers or consultants.
The size of the market and your price will probably dictate
which scenario is best.
· If the buying process is fairly straightforward, you can sell
direct via a website/catalog or perhaps through a
wholesale/retail structure. You may also use an inbound
telemarketing group or a field sales team.
· If you need complete control over your product’s delivery and
service, adding a channel probably isn’t right for you.
Identify natural partners
If you want to grow beyond the direct model, look for

8. companies that have relationships with your end-users. If
consultants, wholesalers or retailers already reach your
customer base, they’re natural partners.
Build your distribution channel
If you’re setting up a distribution channel with one or more
partners, treat it as a sales process:
· Approach the potential channel partner and “sell” the value of
the partnership.
· Establish goals, service requirements and reporting
requirements.
· Deliver inventory (if necessary) and sales/support materials.
· Train the partner.
· Run promotions and programs to support the partner and help
them increase sales.
Minimize pricing conflicts
If you use multiple channels, carefully map out the price for
each step in your channel and include a fair profit for each type
of partner. Then compare the price that the end-user will pay; if
a customer can buy from one channel at a lower price than from
another, your partners will rightfully have concerns. Pricing
conflict is common, and it can jeopardize your entire strategy,
so do your best to map out the price at each step and develop
the best solution possible.
Drive revenue through the channel
Service your channel partners as you’d service your best
customers and work with them to drive revenue. For example,
provide them with marketing funds or materials to promote your
products; run campaigns to generate leads and forward them to
your partners.
Phase 5 Resources:
The article offers advice on how spa owners can build a
marketing platform. The author contends that it is advantageous

9. to have a solid understanding of the basic concepts of a
marketing plan because it will be useful when creating one. Spa
owners should know that they are selling services and retail,
problem solutions, and convenience among others. The
packaging aspect of a spa business extends to its treatment
programs and business image.
In this article the authors discuss the results of advances in
measuring the effectiveness of marketing. Due to technological
developments and news sources of information, the chief
marketing officers of corporations are able to measure
marketing impact more precisely than ever before. This has led
to some dissatisfaction among marketing executives, not
because of the new tools used to measure impact, but because
they are revealing in detail the wide failures of marketing
initiatives. The authors advise marketers to improve
performance through re-thinking marketing strategies and
making more efficient use of monies allotted to marketing.
The article offers view on taking risks in business. It should be
noted that entrepreneurs who like risks had better learn how to
rein in their risk-taking or they will make decisions that put
their companies in jeopardy. It can be observed that most people
are uncomfortable with taking risks. They tend to focus on the
downside of risks. That fear is enough to keep many would-be
entrepreneurs from going into business. It should be
remembered that starting a business always involves a certain
amount of risk.
New enterprises don't exist in a vacuum: They rise or fall
depending on myriad contextual factors, all of them
interrelated, and all of them affected by government policy.
U.S. lawmakers must carefully consider the effects of

10. interventions in at least 12 areas, ranging from capital markets
to tax treatment to intellectual property to health care. Their
decisions could shore up--or further weaken--what has long
been America's greatest economic asset.
Metrics and Does Metric Use Affect Performance of Marketing-
Mix Activities?
Although the marketing field has made progress, researchers
have paid less attention to what drives managerial use of
marketing and financial metrics and whether metric use is
associated with marketing-mix performance. The authors
propose a conceptual model that links firm strategy, metric
orientation, type of marketing-mix activity, and managerial,
firm, and environmental characteristics to marketing and
financial metric use, which in turn are linked to performance of
marketing-mix activities.