Example of premium pricing method case study

The current paper is devoted to the analysis of appropriate promotions strategy as well as an illustration of the most appropriate pricing method for two product/target market combinations. When conducting this analysis, a conclusive illustration on the two promotions strategies is undertaken so that an inclusive decision is made as to why they are different or similar. Also, two pricing methods are highlighted for two product/target market combinations to present their differences and similarities. The two products combinations are non-lethal for handgun owners, and fitness products for black women aged 18 to 30. After conducting inclusive research on the pricing strategies and promotion strategies, the paper ends with appropriate conclusions with regard to appropriate pricing and promotion methods for two product/target market combinations.

A key element of marketing mix is promotion. Basically, promotion involves one or two way communication taking place with the products’ consumer. Promotional strategies are classified as either pull promotional strategy or push promotional strategy. For non-lethal personal security products targeting handgun owners, a pull promotional strategy will be appropriate. Higher spending on advertising as well as consumer promotion is likely to result in consumer build up for the product. Advertising, for instance, will emphasize the desirable qualities that definitely arouse the handgun owners to patronize or buy non-lethal personal security products.
However, the promotional strategy of fitness products for black women aged 18 to 30, a push promotional strategy is appropriate. In this strategy, the product, fitness product, is directly taken to the targeted consumer (black women aged 18-30) through any means. The goal of push promotional strategy is to ascertain that the consumer is aware of the products’ brand at the purchase point. In essence, this promotional strategy employs a company’s sales as well as trade promotional activities like point of sale displays, direct selling and trade shows so that the consumer’s demand for the product is created. Accordingly, push promotional strategy entails taking the product to the consumer.
Conversely, a pull promotional strategy basically entails those activities that motivate the customer to seek the products’ brand in more or less active process. In essence, it is a promotion strategy that makes the customer to go for your product. The pull promotion strategies for the product combination could include word of mouth, advertising, customer management and relationships, discounting and sales promotions.
Besides offering support to each other, another similarity between the two promotional strategies is that they both focus on product promotion and at increasing the sales volume of the product. However, the difference manifests itself at the user level. Significantly, push strategies are of importance to both distributors and manufacturers. This is because they are traditionally involved in product’s movement in a distribution process. To promote the brand quality and to create end customer demand, push promotional strategies are appropriate.
Clear distinction between pull and push promotional strategies are simply that pull strategy promotes to the customer or consumer whilst push promotes to retail or trade. Therefore, pull strategies attract trade resulting from increased demand that attracts retail buyers. A push strategy attracts additional consumers. This is because of the increased existence in a store, perhaps signifying marketing leading image dominance. The push promotional strategy is direct, aggressive and calls prospects to action while pull promotional strategy is basically passive and builds brand equity. Besides, it appeals to emotional trigger.

Pricing is simply a practice of determining what the business receives in exchange for the products it sells. Common factors of pricing are market place, market condition, competition, costs of manufacturing, and product quality. The most appropriate pricing methods for vacation products targeting gay men or women owners and fitness fitness products for black women aged 18-30 would be the premium pricing method and demand based pricing method.
This method of product pricing is as well known as prestige pricing. It involves setting higher prices to aid in positioning the product strategically at upper market end. Continually, the product is priced at a high end of the likely price range. The aim is to win the consumers who are status conscious. When this method is used with the vacation product and fitness products for black women aged 18-30, their status conscious needs are highly satisfied. This method will help reinforce and enhance the luxury image of the product and hence attract more users. Gay men or women are likely to buy more of the product if it is premium priced because of their notion that a high price is an indicator of high product standards and high quality. Also, the consumers will believe that the product is a sign status. This will basically attract more status customers to place an order for the product.

Demand based pricing method

Besides the premium pricing method, a demand based pricing strategy is also appropriate for the two product combinations. Accordingly, it is a method of product pricing that is dependent on the consumers’ demand of the product. Therefore, it is any method of pricing that makes use of consumer demand as central element. It is also dependent on perceived value of the product to the customer. This implies that the product is either priced using the skimming pricing, psychological pricing, price discrimination, penetration pricing or bundle pricing as may be dictated by the demand of the product. Price charged is dependent on gay men and women demand for vacations.
The strategy adopted is dependent on the prevailing market conditions, level of competition, manufacturing costs, and the products’ quality that basically influence consumer’s demand. For instance, for vacation products and fitness products combination, price skimming strategy will be used simply by charging higher prices at the stage of product launching in the market and slowly lowering the price at its becomes mature, its demand increases and hence occupies larger market share. This is likely to boost the demand of the product and increase sales volume in new markets.
As demand increases for the products, price discrimination or bundle pricing may be employed. At the end, profit is likely to be maximized. Also, price skimming will help recoup product’s advertising costs. Another demand based pricing method is the penetration pricing. To increase the company’s market share, vacation products will be deliberately priced lower than that of the competitors so that higher sales volume is achieved. Subsequently, higher profits realized may be used to expand the market and to offer more of the product.
The difference between premium pricing method and demand based methods stems from the focus of pricing. Whilst premium pricing method involves setting higher prices to aid in positioning the product strategically at upper market end and that the product is continually priced at a high end of the likely price range, demand based pricing method is basically demand based. The product pricing is majorly dependent on the consumers’ demand of the product and thus does not guarantee consumers status or luxury.

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