Price Setting Strategies
According to Tellis (1986), a price-setting process is a sophisticated multi-step approach that has to take into account the external environment, competitors, and consumer demand for the product, as well as internal factors, such as operating costs. The process of setting the price of various products in a firm, such as Wal-Mart depends on various variables. The customer’s willingness to pay certain for the products as well as the current competitions within the market derives much force that determines the variances therein. The costs of products within the market always have lower limits for short-term viabilities. Dolan & Jeuland (1981) observe that the upper limit is often a combination of the target customer’s ability to afford the products in question. Additional reasons for such costs emanate from the clientele perception of the products as well as the comparisons to the alternatives depending on the opportunity cost forgone (Montgomery, 1997).
The challenges of setting the price as indicated above can be detrimental to a firm’s productivity. At the outset of the cycle of prices, an audit emerges at the initial stages to pull together all data available to derive more insights. The ideal ways of setting such prices should be in line with the objectives of the firm. Therefore, the pricing objectives should have a relative way of flowing from the strategy of Wal-Mart (Meglerass & Meissner, 2006). While such a challenge would be easier to solve, the firm should set on a deal to select one or more structures and elements as well as price levels that can meet the set objectives. Therefore, an appropriate understanding of the competition as well as the needs of the clients will enhance the position of the firm in the market to strategize for various levels of pricing.
Dolan, R. J., & Jeuland, A. P. (1981). Experience curves and dynamic demand models: implications for optimal pricing strategies. Journal of Marketing, 45(1).
Maglaras, C., & Meissner, J. (2006). Dynamic pricing strategies for multiproduct revenue management problems. Manufacturing & Service Operations Management, 8(2), 136-148.
Montgomery, A. L. (1997). Creating micro-marketing pricing strategies using supermarket scanner data. Marketing Science, 16(4), 315-337.
Tellis, G. J. (1986). Beyond the Many Faces of Price: An Integration of Pricing Strategies. Journal of marketing, 50(4).