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Proposed Pricing Strategy Essay

 What a company resolves to be the pricing strategy dictates how the consumers classify the price of the brand and how the company came up with the price of the product. The consumer in most instances infers the quality of the product on the basis of the price. One of the strategies that one can adopt is the value-based pricing strategy. This is a strategy that sells the product at the right price to meet the consumer wishes. For some consumers, they may feel that for a product to be of good quality, it must be expensive.

Some believe that for a product to last long it must be expensive and if it is cheap, it may last for a short while then waste away. Other consumers may believe that buying expensive items is wastage of money and the cheaper product serves the same purpose. It is very important for an industry to understand and know all the perceptions of the customer that they want to sell to their product.

This strategy has been famous among many marketers as they also set an everyday-low pricing approach to determine their discount pricing as time goes by. The set objective of this approach is

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to uncover the right blend of the quality of the product. Another objective would be to uncover the costs of the product and product prices that satisfies the consumer fully. It would also be advisable to discover the need of the consumer keeping also in mind the profit targets of the firm.

Several companies like WallMart’s have succeeded into venturing into the market because of its slogan, “we sell for less“. They are one of the biggest retail traders in the world. A pricing strategy should strike a proper balance among product design and delivery. Proper design and delivery of the product is very important. The value of the product can be enhanced through many types of well executed marketing programs.

The point of value pricing does not point out that one needs to sell the product at a cheap price or at a lower price. Consumers are willing to pay more if they perceive or get a hint that the quality that they get from a product is guaranteed. It is possible, in short to sell high valued prices for products and get a market for these products. Companies like Gillette, for example introduced the Mach III and it priced it’s catridges at a fifty percent premium over its priciest blade by then.

Despite the deflationary climate, the customers bought the product and did not mind the price since they knew they were getting a quality product that is going to satisfy their need. Gillette reached its highest market share at that particular period because they had learned to utilize the value- based price strategy.

The other key to a successful value-pricing strategy is to lower the costs of production. This could include material substitution, changing of processes, reformulation of products and investing in efficient technology and personnel. An example would be Sara Lee who was able to get adequate margins for years on its L’eggs women hosiery with minimal price increases.

The combination of minimal prices and the strong brand image of L’S eggs resulted into a fifty percent market share. It is of most importance to understand that cost reductions should not sacrifice the quality of the product. While it is good to look at how to cut cost, the quality of the product should not be compromised. A secondary key that should also be considered is the product price.

The price that’s suggested by estimating value perceived should be utilized in determining actual market prices. This can be then adjusted by cost and competitive considerations thereafter. General Motor’s Cadillac division has always used target pricing to arrive at the price suitable to sell its cars. They determine the optimal price based on the consumer assumption then considering the profit they should make, they figure out the cost of the car.


Kurtz, D. L. & Mackenzie, K.S. (2009).Contemporary Marketing. Canada: Cengage Learning.

Mills, G. (2002).Retail Pricing Strategies and Market Power. Australia: Melbourne Univ.Publishing.

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