Pricing Orientation and Pricing Capabilities

Question: Discuss about the Pricing Orientation and Pricing Capabilities. Answer: Introduction: Product development, also sometimes termed as management of new product, is a sequence of steps including conceptualization, blueprint, expansion and marketing of newly formed goods and services (Fuller, 2016). Product developments main objective is to develop, preserve and augment the market share of a company by satisfying the demand of a consumer. Every product that comes out of the manufacturers house does not have that ability or features to attract consumers, so it is essential to identify the target market for a product or service, which is critical in defining the developmental process of a product. Influence of technology on services characteristics: Businesses have made good use of technology in reducing costs, improving the process of communication and reaching to consumers in a better way. Moreover, with help of technology companies make sure that there is no comprise in quality of any product. Technology also helps consumers in comparing two products having similar features. Services cannot be stored but technology has helped in depicting how it can be properly used and distributed among people. Marketing and managing intangible products are difficult as consumers cannot see or experience the hidden value associated with the. For example, the ability of a teacher to teach a student is impossible to evaluate as it also depends on the learning capability of students. Moreover, intangibility of products cannot be stored so that the same can be enjoyed over time. Product differentiation would work only when the premium price that is being charged by the company proves to be enough in casing the costs of focusing on the desired quality (Makadok Ross, 2013). The quality and design of the products should be such that can bring in returns, which needs to be above average. Market Oriented Pricing Decisions Market-based pricing approach can also be stated as competition based stratagem and through this pricing strategy, a company assesses the prices of related products on the market (Liozu Hinterhuber, 2013). It is significant in considering those products that are comparable with the ones being offered. It depends on the product, which has more or less the same features as that of its competitors. Depending on that, the company sets its prices higher or lower than the pricing of the competitor. For example, if a particular product has an extra-added feature over its rivals product, the company could settle on same pricing, thus making it an improved value or could even price it a bit higher for that supplementary feature. Non-Price competition: Non-price competition exists under oligopoly and monopolistic competition, where firms can be enormously competitive (Chie Chen, 2014). Non-price competition involves two phases: one that executes new facet of production and another that markets these transforms to public. Non-price competition exists where there is high quality products, enhanced observation of brands, various products for different demographics and improvement in tactics of sales. Consumers Association of Price with Quality: Organizations believe in positioning of price, which is based on assumption that buyers evaluate quality by price, especially under circumstances where decisions are complex in nature. Consumers at times become uncertainty relating to the quality of a product through which they assume that higher price specifies higher quality level. Prestige Pricing is used when buyers correlate an elevated price with advanced quality. In Prestige pricing, prices are set at a synthetically high point for provision of quality or prestige image. It has lower fixed costs as overall strategies facilitate a store in developing infrastructure and efficiencies in supply chain. Establishing repute for having everyday low prices, customers deduce the products quality. Consumers in need of higher quality products might not have the belief that those stores can deliver quality products. Reference: Chie, B. T., Chen, S. H. (2014).Non-Price Competition in a Modular Economy(No. 1401). ASSRU-Algorithmic Social Science Research Unit. Fuller, G. W. (2016).New food product development: from concept to marketplace. CRC Press. Liozu, S. M., Hinterhuber, A. (2013). Pricing orientation, pricing capabilities, and firm performance.Management Decision,51(3), 594-614. Makadok, R., Ross, D. G. (2013). Taking industry structuring seriously: A strategic perspective on product differentiation.Strategic Management Journal,34(5), 509-532.