Know-How Exchange : Student Questions

www.Marketingprofs.com is a most useful website for marketing professionals where they are able to get their queries clarified. We the students of D.J.Academy for managerial excellence is looking forward for your valuable clarifications.

First of all, I disagree with your generalized nature of your observations: Pricing for products has gone up but down for services. This depends on the products, services, geography, economic conditions, competition, product or service lifecycle, etc. For instance, gasoline prices have gone up. Computer prices have gone down. Dry cleaning service prices have gone up and cell phone service has gone down - at least in America.

In general, pricing is a continuous process and part of the overall marketing strategy. Pricing starts with understanding your customer’s needs and how the customer perceives value for a product or service add value. Pricing takes into account where the competition sets prices and how well they meet the customers’ needs. Pricing also accounts for creation of value. For instance in the case of a commodity a simple model of setting price based on cost, desired profit, and market share is probably adequate. However, if you augment your basic product with other service such as local inventory, on site application support, and a product reference design, this increases your value to the customer and allows you to set price above the competition who doesn’t offer this. If you increase the offering a little further by analyzing your customers’ customers’ needs and developing concrete joint product roadmaps, then you are “partnered” with your customer and you can command high price based on his dependency on you.

I hope this helps!

Wayde