Issues on pricing strategy

However, when it comes to the market, the concept of what is right and wrong is a bit blurrier. Over the years, governments have put laws on the books for the most heinous of fraudulent pricing strategies, but even then some tactics are considered quite unethical, and you may be committing these missteps without even knowing.

Issues on pricing strategy

Producers and retailers practice ethical pricing strategies to earn profits without defrauding competitors or consumers. Despite that, competitor's prices, convenience, availability and other factors affect consumer impressions of fair pricing.

Business laws protect competitors and consumers from many unethical pricing strategies that unscrupulous marketers may wish to attempt. Fair Pricing Producers sell products at wholesale costs that pay for the labor, materials and overhead to make the products with a reasonable margin of profit.

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Retailers commonly mark up the price to two or three times the wholesale cost to pay for employees and overhead with a considerable profit margin for the company and its shareholders. At times retailers cut prices to stimulate sales of particular products or to sell large quantities of popular products.

Advertising Schemes Trade laws bind companies' advertising price comparisons. A car dealer who claims to sell for thousands less than competitors has to be able to produce documentation of that competitor's prices and their own to prove it.

Advertisers publishing an inexpensive product when there is not much inventory of the product are often using the illegal bait-and-switch scheme with a large inventory of a similar product at a much higher price.

Price Cutting At times firms cut prices to sell off outdated stock or to make way for a new line of products. Some vendors set prices very low for new products to introduce them to the market and inspire customers to try them.

These are both legal and ethical pricing strategies.

Deviating from Your Pricing Strategy

A company uses unethical pricing cuts to squash the sales of competitors by selling the same products for lower prices. Federal laws protect competitors from undercutting. Monopolizing A monopoly exists when there is only one source of a particular product.

Issues on pricing strategy

Federal antitrust laws protect competition in the marketplace by outlawing monopolies. The government divided the company up inwhich gave rise to new competing phone companies. It is also illegal to fix prices or divide markets among competitors to undermine competition.

An assumed monopoly exists when one firm sets pricing for the whole market. References 2 Federal Trade Commission: He writes fiction for children and adults and draws on experiences in education, insurance, construction, aviation mechanics and entertainment to create content for various websites.

Springs studied liberal arts and computer science at the College of Charleston and Trident Technical College.Pricing is one of the classic “4 Ps” of marketing (product, price, place, promotion).

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It’s one of the key elements of every B2C strategy. The price of a product or service plays a large part in how well it sells.

Pricing is one of the classic “4 Ps” of marketing (product, price, place, promotion). It’s one of the key elements of every B2C strategy. Aug 13,  · Market penetration pricing refers to a strategy in which the price of a product is set low following its introduction in the market. Once the product has found a market segment, the business raises prices to a more reasonable and expected level/5(8). Renowned investor Warren Buffett has said, “The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10%, then you’ve got a terrible business.”1.

Producers and retailers practice ethical pricing strategies to earn profits without defrauding competitors or consumers. ADVERTISEMENTS: The following points highlight the top eight specific problems of pricings.

The problems are: 1. Pricing Over the Life Cycle of the Product 2. The rate of Market Growth 3. The Erosion of Distinctiveness 4. The Significance of Cost 5. Post-Skimming Strategies 6. Mixed Strategies 7. Pricing in Maturity 8. Pricing Products in Decline. Aug 13,  · Market penetration pricing refers to a strategy in which the price of a product is set low following its introduction in the market.

Once the product has found a market segment, the business raises prices to a more reasonable and expected level/5(8). Marketing > Pricing Strategy. Pricing Strategy. One of the four major elements of the marketing mix is price. Pricing is an important strategic issue because it is related to product positioning.

The payoff for getting your company’s pricing strategy right has never been more important. Pricing research usually concentrates on customers’ sensitivity to pricing. This price sensitivity is driven by the nature of the market, the competitive environment, the target within that market, the differentiation level of the product or service.

Ethical Issues of Pricing Strategy | ashio-midori.com