Pricing Strategies and Tactics - Introduction
Pricing is a very powerful weapon in marketing, but there are many different ways to use it to help achieve marketing objectives. It is important to make a distinction between pricing strategies and pricing tactics
These are adopted over the medium to long term to achieve marketing objectives They have a significant impact on marketing strategy.
These are adopted in the short run to suit particular situations Tactics have only limited impact beyond short-term sales of the product itself.
It may also be that the pricing strategies a business can implement are constrained by the competitive position of the business.
It is often said that there are four categories of position a business can find itself in which influence the control it has over pricing:
(1) Price taker
Here, a business has no option but to charge the ruling market price.
(2) Price maker
For a price maker, the business has a strong enough competitive position to be able to fix its own price – either higher or lower than the competition.
(3) Price leader
A price leader is often a market leader whose market share is so strong that its price changes are closely followed (and often copied) by rivals
(4) Price follower
A business that just follows the price-changing lead of the market leader (ignoring the rest of the competition)
Join Jim Riley and the tutor2u BUSS4 team for an intensive day designed to prepare students for the challenges of BUSS4 in June 2015. Each of the five workshop sessions introduces and builds effective essay planning and writing technique. We do this in the context of looking at both Manufacturing in the UK (Section A) and core topics for Section B including leadership, change management, technology, strategic choice and globalisation.