Specific strategies, such as identifying product strengths, adjusting pricing, or acquiring another business, have historically been used to get a small enterprise off the ground. Understanding these strategies, and skillfully implementing them, can help entrepreneurs achieve success. Growth Strategy A growth strategy entails introducing new products or adding new features to existing products.
Almost all companies, large or small, base the price of their products and services on production, labor and advertising expenses and then add on a certain percentage so they can make a profit.
There are several different pricing strategies, such as penetration pricing, price skimming, discount pricing, product life cycle pricing and even competitive pricing. Penetration Pricing A small company that uses penetration pricing typically sets a low price for its product or service in hopes of building market share, which is the percentage of sales a company has in the market versus total sales.
The primary objective of penetration pricing is to garner lots of customers with low prices and then use various marketing strategies to retain them. For example, a small Internet software distributor may set a low price for its products and subsequently email customers with additional software product offers every month.
A small company will work hard to serve these customers to build brand loyalty among them. Price Skimming Another type of pricing strategy is price skimming, in which a company sets its prices high to quickly recover expenditures for product production and advertising.
The key objective of a price skimming strategy is to achieve a profit quickly. Companies often use price skimming when they lack financial resources to produce products in volume, according to the article "Pricing Strategy" at NetMBA.
Instead, the company will use the quick spurts of cash to finance additional product production and advertising. Product Life Cycle Pricing All products have a life span, called product life cycle.
A product gradually progresses through different stages in the cycle: During the growth stage, when sales are booming, a small company usually will keep prices higher.
For example, if the company's product is unique or of higher quality than competitive products, customers will likely pay the higher price.
A company that prices its products high in the growth stage also may have a new technology that is in high demand.
Competitive-Based Pricing There are times when a small company may have to lower its price to meet the prices of competitors. A competitive-based pricing strategy may be employed when there is little difference between products in an industry. For example, when people purchase paper plates or foam cups or a picnic, they often shop for the lowest price when there is minimal product differentiation.
Consequently, a small paper company may need to price its products lower or lose potential sales. Temporary Discount Pricing Small companies also may use temporary discounts to increase sales.
Temporary discount pricing strategies include coupons, cents-off sales, seasonal price reductions and even volume purchases. For example, a small clothing manufacturer may offer seasonal price reductions after the holidays to reduce product inventory.
A volume discount may include a buy-two-get-one-free promotion.Pricing strategy in marketing is the pursuit of identifying the optimum price for a product. This strategy is combined with the other marketing principles known as the four P's (product, place.
Pricing Strategy One of the four major elements of the marketing mix is price. Pricing is an important strategic issue because it is related to product positioning. Pricing Strategy Today’s highly competitive business world forces companies to create different tactics and relatively rely on multiple pricing strategies to conduct business.
As is known, pricing is one of the most important steps for business plan which needs good research, calculations and formulations. There are 11 different types of pricing, and the company needs to choose one type of pricing over the other to become successful.
The second most important factor in the marketing mix after product is the type of pricing being used. This is because the type of pricing can alter the distribution and the promotion mix as well.
The word “strategy” means different things to different people, much of which isn’t really strategy at all, A Strategy by Any Other Name, more on this topic. Within the domain of well-defined strategy there are uniquely different strategy types, here are three. 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 webkandii.com setting prices, the business will take into account the price at which it could acquire the goods, the manufacturing cost, the market place, competition, market condition, brand, and .