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Effect of pricing on competitors
Players in the same industry are more likely to sell their products with the same margin however sometimes individual company may need to sell its product either higher or lower depending with the prevailing condition. When selling higher than once competitors, the company should ensure there is value for money; the products must have something unique than that one offered by its competitors.
Despite the high cost, customers will be kept coming by the quality that the company is able to offer for instance when the company offers a unique products or it is the first one to offer a certain product in the market, then it can adopt premium pricing model at the introduction of the product to attract higher gains but offer the required quality by the customer (Kerin & Peterson, 2009).
There are times that a designer shop may be know of selling its goods cheaply than the prices set by its competitors; in such a case, the company needs to ensure that the fact that the goods are cheap does not mean that the quality has been compromised; there should never be a trade off, the only thing that can make the commodity cheaper is economies of scale, trade discounts, reduced profit margins, and some occasional offers and promotions.
The target market comes into play when reducing prices; the company should ensure that a price reduction does not create the perception that quality is low (Kotler & Kevin, 2006).
Effect of pricing on designer’s/brand products
Other than price playing the role of marketing the products, it has some psychological effect on consumers mind and influences their behavior; the pricing strategy adopted by a designer shop should be managed effectively to differentiate the product from those offered by its competitors. When making a certain designer apparel, there is the target market that the particular commodity targets; the market in this context is dividend according to economic wellbeing of the segment market (Anon, 2010).
When deciding the prices, they may be used for two main reasons depending with the economic status of the target market; in the case of the well to do in the society, an improvement of quality or an introduction of more variety brands in the market then increase the commodity prices may be an indication of better quality and probably this will increase the demand for the commodities.
Among the less fortunate in the community, reducing the products costs using discounts, gift vouchers among other methods of saving a shilling or two to the customer will go well with them; they are likely to brand the company as selling products at a lower cost that the cost sold by others (Christ, 2008).
Conclusion
In either case, the most important thing is to understand once customers and target market; when prices are increased, the company stands to benefit higher margins of profit as they offer quality to their customers, alternatively when the prices have been reduced, the expectation is that the number of customers will increase leading to an increase in sales and economies of scale comes into play.
The most important thing to keep in mind in either the approach is that quality should not be compromised regardless of whichever the act, the general statement is that it is better to sell high quality products expensively than sell low quality cheaply (Anon, 2008).
References
Anon. (2008). Advertising Primer. Small Business Administration. Web.
Anon. (2010). The Impact of Relevance in Publishing AND Advertising. Web.
Christ, P. (2008). Principles of Marketing. Web.
Kerin, R. A.,& Peterson, R. A. (2009). Strategic Marketing Problems: Cases and Comments. London: Pearson Education.
Kotler, P., & Kevin, L. (2006). Marketing Management. New Jersey: Prentice Hall.
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