Introduction
Pricing and promotions are elements of marketing mix, organisations whether is the service or goods industry need to set a price that is competitive in the market and offer maximum returns. To attain this goal, there are different approaches to pricing and promotion. This paper looks into pricing and promotional strategies that a company can adopt.
Pricing Approaches
Premium Pricing
The approach adopted by premium pricing models is selling of products at relatively high prices than that offered by the competitor. The strategy is particularly effective with unique or new products in the market. For example if a certain health facility is fast in automation, it can offer the services at a relatively higher cost to benefit form the initial stages of the invention before competitors adopt theirs.
Penetration Pricing
The model advocates for a pricing method where an organisation sets its prices at a low rate than that offered by the competitor; the aim of the approach is attack a large mass of people to the products. For example in a hospital set up, the managers may decide to set consultation fee at a minimum rate, so that service charge can be minimized.
Economy Pricing
It is a pricing model that aims to keep the bare price of commodities low; it uses organisational advantages to benefit the larger organization. For example, a hospital can have large procurements of medicine and enjoy economies of scale; the benefit is not only enjoyed by selling medicines cheaply but service can also be offered at a lower rate because of the benefit from large consignments.
Price Skimming
Companies with strong brand name use the strategy; in the approach, the companies use their name to charge expensively for their goods, as people will believe that they have good services. It also a strategy to capture the high-class people in the economy that think that expensive is quality.
Psychological Pricing
The approach aims at creating an impression in consumers mind that certain commodity is sold cheaply while it is not always the case it places prices like $99, $999 and $999; it creates a minor distinction, which have a huge benefit to a company (Hooley and Saunders 67-87).
Promotion Strategies
To sell a products, a company need to advertise and device ways to create awareness of the existence of the products; there are two approaches to promotion; PUSH and PULL approaches.
PUSH Approach
Under this approach, a company use the available resources to create awareness and make product affordable to the target customer. It is an approach, which uses discounts, and low pricing that are irresistible to customers. When the strategy is used, then customers are left “guilty” of not having a certain product yet it is affordable. In health facility case, the hospital may set the cost of certain necessary tests at a minimum; then undertake massive campaigns to create awareness of the facility at the cheap cost.
PULL Approach
Under this approach, massive advertisements and persuasion mechanisms are adopted to ensure that an organisation’s products knowledge of existence has been created.
The end user and the promoters are at close links and interact in the course of advertising. The organisation aims at creating demand for its products; for example a hospital may have massive campaigns educating people on the need to be immunized against a certain disease, this will create a demand for the service to the benefit of the health facility (Kotabe and Helsen 12-34).
Works Cited
Hooley, Graham, and Saunders John. Competitive Strategy: The Key to Marketing Strategy. New York: Prentice Hall, 1993. Print.
Kotabe, Masaki, and Helsen Kristiaan. Global Marketing Management. New York: John Wiley & Sons, 2004. Print.