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Pricing Method in Marketing. Our company Huberdale Watches has selected to produce superior products. Our aim is to set appropriate price for our brand which will satisfy our customers and gain income. We expect to take control of a large p

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Introduction

INTERNATIONAL UNIVERSITY COLLEGE Sofia Pricing Methods in Marketing Coursework in FUNDAMENTALS OF MARKETING Student names: Bayko Minchev Baykov Ivan Svetoslavov Stanimirov Viktor Stefanov Voyvodov Vasil Todorov Shterev Martina Svetozarova Milcheva Program: Foundation Year, Level 0 Lecturer: Dr. V. Blagoev October, 2008 INTRODUCTION Price is one of the most important and complex factors when selling a product. In marketing we define price as the financial equivalent which we pay for obtaining certain goods or services. According to Kotler and Armstrong (Principles of Marketing, 2001, p.371) 'Price is the amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service'. On the basis of that statement in this material we are going to present the possible price settings for our product and how to satisfy our clients and to show them that high quality is not always connected with a great amount of money. Our company "Huberdale Watches" has selected to produce superior products. Our aim is to set appropriate price for our brand which will satisfy our customers and gain income. We expect to take control of a large part of the market of luxury watches. Everything our company does is in the best interest of the requirements of the costumers. Before setting a price the company had to decide on its strategy for the product. If the company has selected its target marketing and positioning carefully, then its marketing mix strategy, including price will be fairly straightforward. METHODOLOGY In our research for setting a proper price for our product we use the help of several sources - books of illustrious marketing authors and the Internet. ...read more.

Middle

Usually retailers buy the stock and add their own percentage profit in order to arrive on the final price in the stores. Every different product is a different case depending on the type of the product and the price set by the manufacturer. With some products the retailers want to have profit of a 100 percent and with others near zero percent, just to keep the cash flow. Differences between the methods are only two. The first one is that the retailer has a close contact to the buyer and can develop a good 'feeling' about the product even if it's overrated with some high percentage profit. The second difference is that in some cases if the stock is not sold the retailer can put a discount on it and not lose the money he invested but to sell it to the bought-in price. That way he can save it for the next season (if the products are clothes for example) or he can just give it back to the manufacturer. This is wildly used nowadays and retailers and producers sometimes have contracts called "sale-or-return" so that unsold stock may be returned for other stock or credit. For our product the cost-based pricing will be the following: Our company intends to calculate the minimum expenditure for manufacturing high-quality watches then to add small percentage profit in order to cover up all the needing expenses and still to have income for further development. We still need to decide how many sales we are going to make each year and try to meet them to keep up with covering the costs so that the prices will not go higher. ...read more.

Conclusion

Our company is also against the policy of using 'predatory pricing'. That is a very incompatible method for our brand of watches - it is illegal in some countries and is again very risky if the competition is able to respond to this method. We do not have enough finances to pull this off. We intend to take over a large share of the market not momentarily but slowly and steadily. We are also not intending to create a market niche for our product. Our main goal is to offer a price slightly higher that our production cost and lower than competitor prices in order to make a small profit while establishing ourselves as a major watch brand. Conclusion: In conclusion, by considering all the information presented in the analysis and the specifics of the pricing we decided the usage of the competitor-orientated method for our product in order to obtain major share of the market. Of course, there are many advantages and disadvantages for choosing both the cost-based and the competitor-orientated method. Having in mind that our product is widely used we considered that this pricing strategy will help us eliminate a great part of the competition and satisfy our customers' needs and wants, which are our aims. This pricing method will be in assistance for the fast penetration of our product on the market and in the field of business relationships. We run the calculated risk of bankruptcy if there are not enough sales and if customers are not convinced in the quality of our product. Otherwise, we will have the opportunity to approve on the market with a great brand name and a good company position. ...read more.

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