Setting Prices
Many people want to have health, safe, and eye-catching surroundings. This need explains why a small business providing lawn care services to different households in HRM can achieve the best outcomes. However, it is appropriate to consider several factors when setting the right prices. The first factor to consider is the amount of inputs and expenses incurred during the service delivery process (Hinterhuber and Liozu 73). Such costs will determine the best prices for the services.
The approach will also ensure the small business achieves its profits. The “level of demand is a decisive factor to consider whenever setting prices for different services or products” (Kotler and Armstrong 38). Many people in the targeted region require similar services. This situation means that the prices will be much higher for the services. It will also be necessary to consider the prices of different competitors in the region. The business should also examine the quality of the services provided such competitors. This knowledge will make it easier for the business to have the most attractive prices in the region.
The business strategy adopted by the small business should also be used to identify the best prices. For example, the business can establish itself as the leading provider of affordable lawn care services (Hinterhuber and Liozu 76). This strategy will ensure the business provides quality services at reduced prices. The strategy will also play a positive role towards making the business profitable and successful.
The prices should also be determined by the nature and needs of the targeted clients. More often than not, prices “tend to vary for different potential customers” (Ellison and Snyder 3). This is the case because “some clients tend to be riskier than others” (Ellison and Snyder 3). As well, repeat clients should get appropriate discounts in order to support the future goals of the small business (Kotler and Armstrong 52). These factors will make it easier for the small business to realize its potentials.
Price Discrimination
Many businesses engage in predatory or ineffective practices in an attempt to emerge successful. The competition laws embraced in Canada encourage more companies to engage in friendly and sustainable business practices. The Competition Act of 1889 has been playing a significant role in the country. According the Act, business organizations should not engage in criminal offenses such as predatory and discrimination pricing. The “main role of the Competition Bureau (CB) is to assist in the continued administration of the Act” (Tetrault 76).
The commission investigates every form of breach. According to this Act, businesses should never “grant discounts, price concessions, rebates, and allowances to a specific customer while ignoring the needs of the other buyers” (Tetrault 78). However, the law allows companies “to use differentiated prices for specific customers who do not appear to compete with each other” (Tetrault 79). As well, any attempt “to offer a reduced price on a one-shot basis might not be an offense in accordance with the Competition Act” (Tetrault 79).
The Act also forces businesses and companies to just their quantity discounts (Tetrault 79). The law also encourages businesses to ensure such quantity discounts are availed to different customers. This approach will reduce chances of engaging in unfriendly business practices. The requirements have been put in place in order to support the profitability of different enterprises. The strategy has also played a positive role towards supporting the economy of the country. Companies and businesses that engage in such malpractices will definitely be punished in accordance with the Competition Act of 1889.
Odd and Even Psychological Pricing
The odd-even pricing technique is widely used by many marketers in order to achieve their potentials. Larson defines “odd-even pricing as a psychological tactic whereby numeric value is embraced to affect the buyer’s perception of the product’s value” (14).
The tactic is based on “the psychological idea that specific price ranges can be more appealing to specific purchases” (Ellison and Snyder 4). That being the case, a marketer can decide to use odd numbers to price his or her product. Setting the targeted “price at $70 might appear to be more expensive than 69.55 dollars” (Kotler and Armstrong 67). That being the case, the targeted customer will find it easier to purchase the product. This strategy will encourage more potential customers to purchase the product and eventually increase the level of sales.
The above discussion shows clearly that the use of odd-even pricing strategy can produce positive results (Micu and Luiza 48). Marketers should also ensure the targeted prices will make their businesses successful. The above pricing strategy is appropriate because it cannot affect the level of profitability (Larson 17). This argument explains why the above small business should use the pricing strategy.
The strategy will encourage more customers to purchase the targeted services and eventually make the business successful (Micu and Luiza 49). Every pricing strategy should therefore be determined by the needs of the targeted customers. The pricing strategy should also be implemented in accordance with the competition Act of 1889. The approach will ensure every company engages in sustainable business practices.
Works Cited
Ellison, Sara and Christopher Snyder 2012, An Empirical Study of Pricing Strategies in an Online Market with High-Frequency Price Information. Web.
Hinterhuber, Andreas and Stephan Liozu. “Is It Time to Rethink Your Pricing Strategy.” MIT Sloan Management Review 53.4 (2012): 68-78. Print.
Kotler, Philip, and Gary Armstrong. Principles of Marketing, Upper-Saddle River, NJ: Prentice Hall, 2009. Print.
Larson, Ronald. “Psychological Pricing Principles for Organizations with Market Power.” Journal of Applied Business and Economics 16.1 (2014): 11-25. Print.
Micu, Adrian and Angela Luiza. “Strategic Pricing.” Buletinul 63.1 (2006): 43-52. Print.
Tetrault, McCarthy 2004, Overview of Canadian Antitrust law. Web.