Investigate Whatever Morrison Lower Prices Strategy Will Attract New s) Presented To Submission
For a company to remain relevant and grow in the current competitive climate, it has to apply different techniques to ensure that they attract and retain a large number of customers. There are various factors that influence buyer’s behavior. Pricing is one of the strategies that are used by a company. It one of the most important components of the marketing mixes because it is concerned with making a profit. Pricing can influence the customer’s behavior either positively or negatively depending on the nature of the product. For luxurious products such as cars, increase in prices would be interpreted by customers as increase in quality. As a result increase in prices will result in greater sales (Kotler & Keller 2011: 239). On the other hand, increase in prices or normal good such as food stuff and detergents would result in decrease in demand for such goods. This is because normal goods have many substitutes and if one company raises the prices, customers will switch to cheaper substitutes.
A company can use pricing as a form of brand position as it reflects on the quality of the product depending on the characteristics of the target market. Then pricing strategy that a company adopts depends on the product life cycle, competition, and expectation for expansion. During the initial stages of introduction of a new product, a company adopts pricing strategies that will enable them penetrate the new market and create a huge customer base and it may not necessarily bring profits in the short run (Haig, 2011: 50). When there are few or no competitors in the market, a company can charge premium prices and customers will still buy their products since there are no major substitutes. Price leadership is also a common strategy used by company where they charge low prices to attract the largest number of customer in the market. The suppliers will influence the prices set for outputs which is tagged on the price for inputs. This influences the customers’ behavior on what they can buy and in what quantity. A company could also decide to use a varied set of prices depending on the target market (Gillett & Clan, 2012: 34). A company can decide to use captive pricing where the price of a certain product is low but the price of complementary products is high (Paul & Kapoor, 2008: 89). The company gets profit from the sale of the complementary product and not the main product. A company can also choose to adopt a low price strategy but charge premium prices for products that have the best features.
It has been observed that pricing is a major factor that influences the customer buying behavior on many goods. Reducing the prices of goods is one main strategy that an organization can adopt to attract a large customer base. We are living in an age when cost of life is very high. Slight reduction in prices of goods offered by different people would therefore results in a great change in demand of that good.
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