Question 3.5Explain the role of price in strategic marketing management and practice In many companies, the role of price in the marketing of strategic marketing management centre marketing strategies at some companies, on the other hand, plays an important role in many businesses , are not specific . The impact of the global recession and the economy of developed countries , while most companies focus on marketing strategies at the end of 2000 and beginning of 2010 the price down based on their work schedule . Previously, companies, product quality, delivery and product design strategy based on the method used. But now the days of product quality and distribution channels, types of facilities, end users of the service, members of the value chain and the value of the work is to determine a range of possible help. An organization set up new distribution channels and intermediary’s selection can be driven by pricing strategy. As companies he first played the role completely different price, which creates a new set of models for their marketing strategies. Companies during the period of the recession than they cost to ignore. Its shareholders will not be able to find in your favour Pricing Strategies: Pricing strategy for any company or organisation must be monitored continuously because of following reasons: a) Changing external conditions b) Competitors actions c) Opportunity to gain competitive advantage on the basis of price change. Strategy for existing products in the market value increase or decrease in value may include the cost or value that can hold . Competitors pricing strategy , market positioning , product demand and product quality by analyzing customers looked , the companies changed its pricing strategy . Strong impacts on demand and cost information, price strategies . Some companies ” Apple ” the competitive edge of their products are unique and made A¢â‚¬”¹A¢â‚¬”¹it more difficult to replace . Price to communicate with buyers directly and provide a comparison between different brands such as basic price , works as a signal to buyers . Marks head competition with the best quality and prices are changing very rarely . For example : In the late 2000s , Hewlett-Packard, Southwest Airlines , and all companies like FedEx , hiring additional salespeople to reduce the signal level of service to customers as competitors’ cut promotions , and enter new markets as the aggressive pricing strategy (as well ) , to take business away from competitors . The first companies to launch new products to market analysis of its effects on the financial performance of the company . Pricing and marketing strategies to improve the financial performance of companies helps . These days , some companies only hold its market share because of their pricing strategies . Based on the price they directly compete with its rivals . For example : “Pak’n Save” millions of dollars of business strategies based on their price with its competitors compete directly . The importance of the market value : The price of any direct impact on the company’s revenues , so companies know more about their pricing strategies . Furthermore, these days ” companies” means any product of the highest quality high price “, which is the most important fact about the mindset of the buyer to know . No company in its best quality product without having to increase its prices . Every company and its products are some of the strategies under different pricing strategy as follows: a)Skimming Strategy: In this strategy company sets relatively high price for its product during the initial stage of Product’s life. Objectives of Skimming Strategy: *Target those customers who are not conscious or worried about the price and the demand is on its highest peak also competition not yet entered into the market. *One more objective behind this is to cover maximum share of R&D(research and Development) cost of that product by gaining maximum margin from the product sale. b)Penetration Strategy: In this strategy company sets relatively low price during the initial stage of Product’s life. Objectives of Penetration Strategy: *Discourage competition from entering the market by acquiring most of the market share. In this the margin volume is less but the sales volume is way too high. c)Flexible Pricing: In this strategy company charges different prices to different customers for the same product and quantity. Objectives of Flexible Pricing: *It depends upon willingness of customers to pay for the product and it also depends on the competition on different areas. d)One Price: In this strategy company charging the same price to all its customers for same quantity of the product during the initial stage of product’s life. Objectives of One Price: *The main objective of this strategy is to simplify pricing decisions and make good will among its customers. e)Reduce the price: In this strategy company reduce its prices according to gain profit with increase in competition. Objectives of Reduce Price Strategy: *The main objective of this strategy is either to stay in competition or to beat competitors. Question 4 c)Flexible Pricing: In this strategy company charges different prices to different customers for the same product and quantity. Objectives of Flexible Pricing: *It depends upon willingness of customers to pay for the product and it also depends on the competition on different areas. d)One Price: In this strategy company charging the same price to all its customers for same quantity of the product during the initial stage of product’s life. Objectives of One Price: *The main objective of this strategy is to simplify pricing decisions and make good will among its customers. e)Reduce the price: In this strategy company reduce its prices according to gain profit with increase in competition. Objectives of Reduce Price Strategy: *The main objective of this strategy is either to stay in competition or to beat competitors. Organisational structure issues facing Let’s-SPARK It has been suggested in the past that Let’s-SPARK could use either a centralised organisational structure or a decentralised organisational structure to better assist its marketing and growth. Provide a model of each structure and describe their advantages and disadvantages in respect to Let’s-SPARK as a company. Make a recommendation as to which of the structures Let’s-SPARK should develop giving reasons. We are a spread out company with many involving many functions as set out in the synopsis. Provide at least four strategies Let’s-SPARK Electrical Suppliers could work on to improve cross-functional working and co-operation within the company to develop better strategic marketing and growth. Marketing issues facing Let’s-SPARK Let’s-SPARK realises that marketing is probably the most important expenditure for our business. Marketing has had its challenges for us. We need to know how to overcome these challenges for our business to succeed. Going forward our aim is to become the number One supplier of electrical services to national organisations and construction projects within New Zealand. Let’s-SPARK is currently considering moving into both niche marketing and Entrepreneurial marketing. To assist us to evaluate these two methods of marketing, provide information. Clarify each marketing strategy approach as it would relate to Let’s-SPARK The marketing strategy approach relate to Let’s-SPARK are: a) Competition: In this step the company can understand that how they can beat the competitors by make them irrelevant. This can be possible by tapping those opportunities which are not tapped by competitors yet. There are two types of competitors; Direct competition: In this two or more companies fights on similar kind of products. The simple and effective way to win this type of competition is by simply differentiating your products from others. This is also known as Reference Competition. Indirect Competition: In this type of competition, two or more companies compete for the same budget. Company can win this kind of competition by fighting for product supremacy. This is also known as Economic Competition. If your competitive profile does not offer enough differentiation—which is increasingly important the more mature your market becomes—use the ERRC framework to systematically review your options for improving your competitive profile. The ERRC framework is another concept taken from Kim and Mauborgne’s Blue Ocean Strategy. ERRC Stands for: E= Erase R= Reduce R= Raise C= Create b) Partnership: Alliance and partnership are two most common and effective strategic tools which are used in global market. They can ensure that your product is appealing to your target market. In other words, use partnerships to complement your offering as part of your whole product strategy. Two key motives should drive the creation of your partnerships: • achieving market leadership by creating whole product solutions as quickly as possible • achieving and sustaining market leadership by differentiating your product or service Partnerships should be based almost exclusively on these criteria. The goal is to significantly increase your time-to-market advantage. The partnering approach is based on the maturity of product category. Consider following objective when choosing partner: *Choose the partner who reduce the risk of technology will be implemented not correctly in the customers place. Not only would such an event create a negative experience with your product, it could cause a major disruption to the customer’s operations and significantly harm their business. For Example: If let’s-spark alliance with any Australian Light fitting company in Australia to expand its business then they have to make sure that work of their partners will not harm their market value or product value. *As they are entering into new market, so they have no recognition, no brand name and have very low credibility. Partners with established identities will validate you in the eyes of your customers. c) Distribution: A smart distribution strategy is necessary for success, and it can be a source of competitive advantage. It is important to find a distribution channel that makes it convenient for the buyer to purchase and consume your product. Amazon and Dell are examples of companies that have been successful largely because of the way their products are distributed. Distribution is one of the four mail elements of the Marketing Mix. d) Pricing: The last and the most important marketing approach is pricing. Pricing is also one of the elements of Marketing Mix and it is the only one who generate revenue for the company. Any significant change in price will affect on the viability of business. A well planned price strategy should accomplish these goals: *achieve profitability for the company *customers must be willing and able to pay the price you set. Clarify each marketing strategy’s benefits to Let’s-SPARK The benefits of these strategies to Let’s-SPARK are: 1) It helps the organisation to establish itself in the new market. 2) To compete with the competitors more effectively. 3) To gain maximum market share. 4) It gives a proper plan to the company to earn more. 5) It gives the direction to the company. 6) Identifies needs and wants of consumers 7) Identifies new product areas. 8) Allows for test to see if strategies are giving the desired results. 9) Aids in design of products that fulfil consumers needs 10) Determines demand for product Clarify the requirements for Let’s-SPARK to build and sustain growth through each of the strategies For the sustain growth for any organisation following requirements is must: All the strategies must be explained to each and every employee of the company. Chosen partners must have reputation in the market. Chosen partners products and services not affect on your products. Must have the team of market analyst who can predict or understand competitor’s strategies. Must have affective strategies for those products who are in decline phase of life cycle. Analysts must have knowledge that when to decrease or increase the price of a product Distribution channel is well organised. The staff must be well trained and motivated. Let’s-SPARK needs to find new ways of competing in the market. We are aware the basis of competition in many markets is changing rapidly and the real winners in the future will be those who adapt to the changes best. Let’s-SPARK would ask you to make a recommendation as to at least four strategies we could use as a way of sharpening our competing activity in the market place.
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