Reference no: EM133408341
Assignment:
Determining the right price for a product or service is complicated. Marketers need to first determine the strategy that is best for meeting the objectives. Does the organization want to establish a beach-head and gain market share (at a low price), or does it want to reach the elite purchasers (at a higher price)?
Pricing strategies include demand-oriented, cost-oriented, profit-oriented, and competition-oriented approaches. Within these various approaches are price models that include skimming, penetration, luxury, bundling, price-lining, return-on-investment, and more. But finally, and perhaps most importantly, do not discount the strong appeal used with psychological pricing.
All these strategies are interesting, but how does one apply them to a unique product such as a champion racing pigeon? In many instances, the correct price is the price that someone will pay for the item. This is different than what the item might be worth in general - it is what the item is worth to that one particular buyer.
Take pets as an example. How much are people willing to pay for a pet? Or consider an animal that brings prestige, and perhaps even monetary gains, to a buyer - animals such as thoroughbred horses, or racing pigeons - that bring prestige and monetary gains to owners. What are they worth?
Recently, 'New Kim', a champion racing pigeon, recently fetched the amount of $1.9 million, breaking sales records for such a bird! Two bidders (operating under the names of 'Super Duper' and 'Hitman') drove up the purchase price to the record amount, surpassing the $1.6 million spent last year on another champion racing pigeon named 'Armando'. The same Chinese owner is thought to have bought both pigeons.
Discussion:
Make sure to read chapter seven in your textbook before responding to this discussion. Pay particular attention to section 7.6
Watch the following video about the Belgian pigeon:
Explain the primary objective of the following five pricing strategies:
- Discount pricing,
- cost-based pricing,
- prestige pricing,
- even-odd pricing, and
- geographic pricing
Pick one of the pricing strategies (above) and determine SMART (specific, measurable, achievable, realistic, and time-based) objectives for the strategy. This SMART objective resource can help guide you. Examples of SMART objectives:
To achieve a 15% net profit by March 31st,
To generate 20% revenue from online sales before December 31st, or
To recruit three new people to the marketing team by the beginning of January.