PROPOSAL ON EFFECTS OF PRICING STRATEGIES ON SALES VOLUME
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PROPOSAL ON EFFECTS OF PRICING STRATEGIES ON SALES VOLUME
Project overview
Project goal: Pricing strategy is a method used by businesses to improve sales and maximise profits by charging suitable prices for their goods and services. The purpose of pricing a service is to mark up labour and material costs enough to cover overhead expenditures and make a profit.
First-time business entrepreneurs frequently fail because they underestimate the cost of their service. Sales-oriented pricing objectives aim to increase volume or market share. A volume rise compares its sales to those of other companies.
Businesses today are confronting one of the most competitive periods in history. The rise and fall of businesses, as well as the failure of some organisations, indicate that if enterprises are not adequately managed and lack a clear direction, their organisational performance and, ultimately, organisational sustainability are bound to suffer (Utaka, 2008).
Furthermore, pricing strategy is a critical component of an organization’s management emphasis that can either improve or degrade a company’s success. As a result, it is critical that businesses get their pricing strategy exactly correct.
Bearden, Ingram, and Lafforge (2014) define price as the amount a customer pays for a product or the sum of the values that customers trade for the benefits of owning or utilising a product or service. The price is the amount of money or value exchanged for the possession or use of a good or service (Kevin, Hartley, & Rudelius, 2014).
Furthermore, it can be defined as the value assigned to a good or service as the consequence of a complex combination of expenses, research, and a thorough understanding of the perceived value of customers (Kelly & Willam, 2014). According to Kotler and Armstrong (2008), pricing determines the value that a client must supply in exchange for a product or service.
Pricing is the process of determining the price at which a company will offer its products and services, and it may be part of the company’s marketing strategy (Dibb, Simkin, Pride, & Ferrell, 2013).
Furthermore, pricing is the amount of money charged for an item or service; it is the sum of all the values that buyers give up in exchange for the benefits of owning or utilising a product (Kotler, Armstong, & Tait, 2001). Pricing is an important component of a marketing plan, which is part of a comprehensive company plan (Rao & Kartono, 2009).
The primary goal of pricing is to cover overhead expenditures, such as labour and materials, while also producing appropriate profits, which aids in corporate growth and organisational sustainability (Nikoomaram & Jafari, 2011).
According to Yeoman (2011), price is one of the most important components of the marketing mix that organisations can influence. Agwu and Carter (2014) concurred, arguing that price is the only revenue generator among the famous four Ps because it is the only aspect that results in a value exchange.
Pricing is a corporate strategy for selling its product or service; it reflects how serious a firm is about competing in the future. A good pricing strategy is based on carefully gathered market, consumer, and competitor data, which may include professional devices.
Pricing strategy plans will help you improve your chances against more experienced competitors and new entrants by allowing you to recognise and act on any trends and consumer preferences that other companies have overlooked, as well as develop and expand your own select group of loyal customers both now and in the future.
The strategy will also demonstrate to others that you have carefully thought how to price an inventive, unique, and marketable product, increasing your chances of stable sales and profits and providing grounds for investors to financially support you.
This study will use a descriptive survey as its research approach. The comparative analysis will be carried out using the t-test statistic for the comparison of mean scores at the 0.05 level of significance, whereas the response questions were analysed using mean and standard deviation.
Penetration pricing is a pricing tactic that involves setting a relatively low initial entrance price, often lower than the eventual market price, in order to attract new clients. The strategy is based on the idea that customers will migrate to the new brand due to the cheaper price.
Skimming occurs when things are sold at higher prices such that fewer sales are required to break even. Selling a product at a high price and sacrificing high sales to make a large profit is referred to as “skimming” the market.
A variety of factors influence the selection on the best method to utilise. A penetration strategy is typically supported by the ability to keep costs low and the expectation of rapid market entry by competitors. When the conditions are reversed, a skimming method is most effective.
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