Door-to-Door Luggage and Goods Delivery

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Table of Contents

Introduction
The Luggage club
Pricing Strategy
Pricing strategies
Conclusion

Introduction

Price is the one important factor is marketing mix and the pricing decision is the crucial factor which affect profitability of the firm as well its long term success. In this study pricing decision and setting of pricing criteria is analyzed. The Luggage Club is selected for pricing analysis.

The Luggage club

The Luggage Club is a service provider of door-to-door luggage and goods delivery. The Luggage Club offers its international baggage and goods delivery service throughout the world. Their services include transporting customer’s luggage or goods through the standard airline methods. Their services is helpful for customers regarding check-in lines of security and other time consuming delays associated with luggage and is of great relief to their customers. “The Luggage Club provides insurance, at no additional charge, on the contents of each item for up to $1,000 per item shipped. Additional insurance is also available for an additional charge. Weather related delays, mechanical problems, strikes or job actions, acts of God or other elements beyond our control are not covered under this policy”.

Pricing Strategy

They developed gift card which is their alternative pricing strategy. Luggage Club adopted a gift cards which is valid for a year. This is considered as one of their pricing alternative. Pricing alternative can be any thing which boosts sale of the product in the competitive market. TLC is assumed that instead of purchasing the traditional gifts, it is better to offer gift cards.

Pricing strategies

Prices are fixed based on cost of production and a percentage of profit. In the competitive business environment it is important to adopt various pricing alternatives for the product. The price of a product affects the overall business. “In general terms price is a component of an exchange or transaction that takes place between two parties and refers to what must be given up by one party (i.e., buyer) in order to obtain something offered by another party (i.e., seller)”.

Price is basic regulator of the economic system as it influences the allocation of these factors of production. Customers change their buying habits according to product price”.

Different pricing strategy is adopted for increasing market share of the product as well as profitability of the business. Low price will be adopted just to enter into the market and company is more likely to increase their product prices in the later stages of product life cycle. “The most important element of an effective market strategy is the ability to maximize and protect the price of the product. Price is the final measure of customer value and competitive advantage”.

They segmented their market into four categories to yield maximum benefits.

The important matters to be considered in pricing involves economic value to the customer, Price sensitivity, market segmented pricing, pricing in the channel and competitive pricing.

EVC: Economic value to the customer is described as the monetary value of the products based on its benefits. Product can be of similar to the existing products, or a specific product. EVC helps to make a range of prices that customers are willing to pay. Thus EVC method is helpful to price a product from the customer’s perspective.
Price sensitivity: It is the customer’s willingness to pay for the product but it does not involve value analysis. Factors which influence price sensitivity are customer perceptions, knowledge of substitutes and comparison of substitutes.
Market segmented pricing: Segmented pricing is important as the customers are heterogeneous. Spending mentality of the customers for product varies from group to group. The Luggage Club have adopted segmentation pricing by way of forming four groups such as international, Corporate, Handicap and Frequent traveler. This is an effective way to utilize different market segments.
Pricing in channel: It involves pricing under various issues such as double marginisation, incentive issues etc
Competitive pricing: It is based on the responses in the market. It is adopted for utilizing opportunities, to with stand in the market and so on.

Conclusion

Pricing decision can be made according to the situation. The factors such as competition, legal implications, target etc must be considered while fixing the prices. It is a fact that pricing decisions and setting of price plays a crucial role in bringing success to the organization. Changing preferences of the customers also must be studied through market research and appropriate pricing methods can be taken. Market segment pricing is essential to squeeze out profit from various segments. It is concluded that TLC have adopted some of the important pricing strategies which is essential for bring success to the firm.

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