11. Developing Price Strategies and Programs

Having addressed numerous concepts throughout my entries, found on this blog, it is now perhaps, time to address the concept of price and specifically, the sequence of endeavors that take place in the development of price strategies and programs.

By generic definition, pricing is deemed as the process of valuing a product or service, and setting a respective price tag. However, it is worth noting that despite this simple approach, pricing products and services, is often a difficult to accomplish task, as if prices are set too high, customers might find said product or service, to be repulsive, while, if the price is set too low, there will be ramifications within the internal, production and profit related environment of the business.

Ultimately, the concept of pricing is dependent upon a number of theoretical concepts, that either imbue the process of pricing with concrete information, or, directly influence the consumer to purchase the product or service.

One of the evident segmentations of pricing "manipulation", is the existence of the notion of pricing psychology. The value and cost of a product or a service, is evidently relative to what the consumer believes the cost should be. Based on the unique background and experiences that each individual possess, they can deem prices, either too high, too low, or perfectly fit for the value and the quality of the offering.

From reducing an item's price, from 20 euros to 19.99, 1+1 deals and one day sales, to offering first purchase discounts, the number of different ways that psychology can directly influence the purchasing habits of consumers, or even, the pricing sequence of activities, is found within our daily life ventures. For example, there have been multiple occasions, where I was tempted to purchase a product, simply because there was either a timely discount on it, or, some other form of offering, in addition to the original product.

Of course, besides the existence of psychological notions that influence the concept of pricing, there are frameworks that equip the procedure of pricing with concrete information, assisting the process and accurately setting a price to the profound offerings; hence, the existence of demand estimation. Different costs for products and services influence its respective demand in more than one way. By making the assumption that customers are reasonable, increase of a price upon a product, will lead to decrease of sales, while, decrease of price, will evidently lead to a logical increase in sales.  (“Law of Demand,” 2019)

References: 

Developing Pricing Strategies and Programs presentation - Strategic Marketing Management course - KAMK. Retrieved from: DevMoodle - Strategic Marketing Management Course.

Law of Demand. (2019, November 4). Retrieved November 27, 2021, from WallStreetMojo website: https://www.wallstreetmojo.com/law-of-demand/

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