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How strong are current competitors and what are their

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-How strong are current competitors, and what are their current pricingstrategies? If the company faces a host of smaller competitors charging highprices relative to the value they deliver, it might charge lower prices to driveweaker competitors from the market. If the market is dominated by larger, lower-price competitors, a company may decide to target unserved market niches byoffering value-added products and services at higher prices.Other Internal and External Considerations Affecting Price DecisionsBeyond customer value perceptions, costs, and competitor strategies, the company mustconsider several additional internal and external factors.Internal factorsaffecting pricing include the company’s overall marketing strategy,objectives, and marketing mix as well as other organizational considerations.External factorsinclude the nature of the market and demand and other environmentalfactors.Overall Marketing Strategy, Objectives, and Mix-Price is only one element of the company’s broader marketing strategy.
-Before setting price, the company must decide on its overall marketing strategyfor the product or service.-If a company has selected its target market and positioning carefully, then itsmarketing mix strategy, including price, will be fairly straightforward.-Pricing may play an important role in helping to accomplish company objectivesat many levels.** A firm can set prices to attract new customers or profitably retain existingones.** It can set prices low to prevent competition from entering the market or setprices at competitors’ levels to stabilize the market.** It can price to keep the loyalty and support of resellers or avoid governmentintervention.** Prices can be reduced temporarily to create excitement for a brand. Or oneproduct may be priced to help the sales of other products in the company’s line.-Price decisions must be coordinated with product design, distribution, andpromotion decisions to form a consistent and effective integrated marketing mixprogram.Decisions made for other marketing mix variables may affect pricingdecisions. For example, a decision to position the product on high-performancequality will mean that the seller must charge a higher price to cover higher costs.And producers whose resellers are expected to support and promote theirproducts may have to build larger reseller margins into their prices.-Companies often position their products on price and then tailor other marketingmix decisions to the prices they want to charge.-Many firms support such price-positioning strategies with a technique calledtarget costing. Target costing reverses the usual process of first designing a newproduct, determining its cost, and then asking, “Can we sell it for that?” Instead,it starts with an ideal selling price based on customer value considerations andthen targets costs that will ensure that the price is met.

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Term
Fall
Professor
WYATT
Tags
Marketing, Pricing, Lenovo, Production Experience

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