The theme of this chapter is that such a price strategy should be adopted that attract a large number of customers and should be according to the need and requirement of the market.
- In this chapter, Kotler and Lee has explained that, before setting the price, the objective should be determined that whether it is set in order to maximize the sales, usage level and the participation or it is set in order to establish quality leadership position by adopting market skimming strategy.
- Further, before setting a price, the market competition should be analyzed.
- Moreover, authors have described price adjustment strategies, which include
- Discount and allowance pricing i.e., reduction of price through rebates and discount coupons
- Segmented pricing, for allowing the differences in locations, customers and products, psychological pricing that represents adjustment for the psychological effect.
- Psychological pricing in order to make adjustment for the psychological effect
- Promotional pricing, which indicates temporarily reducing price in order to increase the short term sales
- Geographical pricing i.e., adjustment in order to account for the geographical location
- Moroever, there are monetary incentives that reduces the monetary price of the desired behavior,
- Monetary disincentive that increases the cost of the competing behavior
- A non monetary incentive, which enhances the perceived value of the desired behavior and
- A non monetary disincentive that declines the perceived value of competitive offering
Additionally, the discounts and the promotional pricing strategy help to influence the perception of consumers. They can even change the purchase intentions of consumers in a positive way (Gupta & Cooper, 1992).
Since, I am starting a new business so; I will choose the pricing strategy in order to attract more consumers by offering lower price for a short period of time.
Reference: Kotler, P. & N. Lee. (2007). Setting Motivating Prices, Incentives, and Disincentives.In Marketing in the Public Sector: A Roadmap for Improved Performance. (pp. 65-86). Upper Saddle River, NJ: Wharton School Publishing.
Gupta, Sunil. (1992). The Discounting of Discounts and Promotional. Journal of Consumer Research, 19, 401-411