Price is one of the most important and complex factors when selling a product. In marketing we define price as the financial equivalent which we pay for obtaining certain goods or services. According to Kotler and Armstrong (Principles of Marketing, 2001, p. 371) ‘Price is the amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service’.
On the basis of that statement in this material we are going to present the possible price settings for our product and how to satisfy our clients and to show them that high quality is not always connected with a great amount of money. Our company “Huberdale Watches” has selected to produce superior products. Our aim is to set appropriate price for our brand which will satisfy our customers and gain income. We expect to take control of a large part of the market of luxury watches. Everything our company does is in the best interest of the requirements of the costumers.
Before setting a price the company had to decide on its strategy for the product. If the company has selected its target marketing and positioning carefully, then its marketing mix strategy, including price will be fairly straightforward. In our research for setting a proper price for our product we use the help of several sources – books of illustrious marketing authors and the Internet. We believe that this is the most appropriate way to examine the problem and achieve the expected results.
We have chosen and compared two pricing methods which we think are most suitable. We have listed the advantages and disadvantages of each method and their application for our product. Then we decided which one is better. The first method we chose is the cost-based one. It is simple to use and works by calculating the costs of the manufacturing of the product, distributed costs, research and development costs and by adding a certain percentage for the final price. The second method is the competitive-based pricing.
Here we determine the price of our product by researching the prices and qualities of other similar products on the market. At first, however, we will describe the product life cycle which is an important element of a product’s marketing strategy. The Product Life Cycle Every product goes through a life cycle where conditions in which it is sold change. This is a representation of the product life cycle stages. It begins with Development continues with Introduction, Growth, Maturity and ends with Decline. This is a sequence which is connected with changes in the marketing situation.
Michael J. Etzel(Marketing,12th edition) states:”According to a survey that examined the approaches used to price new products , 9% of companies “guesstimate” what the base price for a new product should be , whereas 37% match what competitors charge for a similar offerings. One-half the responding firms charge what the market will bear, if conditions allow. The most common approach, used by 52% of the companies, is to choose a price that is intended to cover costs and provide a fair profit. Because the total is more than 100%, evidently most firms use more than one approach. “