- Project summary
Project goal: pricing strategy is the tactic that company use to increase sales and maximize profits by selling their goods and services for appropriate prices. The goal in pricing a service is to mark up the labour and materials cost sufficiently to cover overhead expenses and generate sufficient profit. First time business owners often fail without realizing that they have priced their service too low. Sales oriented pricing objectives seek to boost volume or market share. A volume increase is measures its sales against the sales of other companies
Businesses today are facing one of the most competitive eras in history. The rise and fall of business and the output failure of some business suggest that if businesses are not properly managed and do not have a clear direction, its organizational performance and ultimately organizational sustainability is bound to be in jeopardy ( Utaka, 2008). Further, pricing strategy is a pivotal component of an organization’s management focus that can elevate or deter a company’s performance. As such it is extremely important that business get their pricing strategies absolutely right.
Price is the amount a customer pays for a product or the sum of the values that consumers exchange for the benefits of having or using a product or service (Bearden, Ingram & Lafforge, 2014). Price is the amount of money or value traded for the possession or utilization of a good or service (Kevin, Hartley & Rudelius, 2014). Furthermore, it can be defined as the worth that is put to a good or service and is the result of an intricate combination of costs, research and a full understanding of the perceived value of customers (Kelly & Willam, 2014). According to Kotler & Armstrong (2008) pricing is determining the value that must be provided by a customer in return for a product or service. Pricing is the process whereby a business sets the price at which it will sell its products and services, and may be part of the business’s marketing plan (Dibb, Simkin, Pride & Ferrell, 2013). Furthermore, price is the measure of cash charged for an item or administration, it is the sum of all the values that customers give up in order to gain the benefits of having or using a product (Kotler, Armstong & Tait, 2001). Pricing is one of the major components of a marketing plan, which is a component of a full business plan (Rao & Kartono, 2009). The principle objective of pricing is to adequately to cover overhead costs including work and materials costs and produce adequate profits which helps to maintain growth in the business and create organizational sustainability (Nikoomaram & Jafari, 2011). According to Yeoman (2011) price is one of the significant components in the marketing mix that organizations can control. Agwu and Carter (2014) agreed stating that among the famous four Ps, price is the only income generator as it is the only element that creates an exchange of value.
Pricing is a strategy for selling the product or service of a business, it is a reflection of how serious a company is in meeting the competition ahead. A good pricing strategy plan is backed by carefully collected market, consumer and competitor information, sometime citing professional device. Pricing strategy plan will help to improve your chances against more experience competitors and newly emerging once the plan enable you to recognize and take action on any trends and consumer preferences that other companies have overlooked and to develop and expand your own select group of loyal customers new and into the future. The plan will also show to other that you have carefully considered how to price a product that is innovative, unique and marketable improving your chance of stable sales and profits reasons for investors to financially back you.
The research method that will be used for this study is descriptive survey. The comparative analysis will be achieved by means of utilizing t-test statistic for the comparison of mean scores at 0.05 level of significance while, the responses questions were analyzed using mean and standard deviation.
The estimated output and outcome, scientific, technological, social and economic impact of the pricing strategy on sales volume are to penetration pricing is the pricing technique of setting a relatively low initial entry price, often lower than the eventual market price, to attract new customers. The strategy works on the expectation that customers will switch to the new brand because of the lower price.
Skimming involves goods being sold at higher prices so that fewer sales are needed to break even. By selling a product at a high price, sacrificing high sales to gain a high profit is therefore “skimming” the market.
The decision of best strategy to use depends on a number of factors. A penetration strategy would generally be supported by the opportunity to keep costs low, and the anticipation of quick market entry by competitors. A skimming strategy is most appropriate when the opposite conditions exist.