Effective Pricing Strategies

Wednesday, January 7, 2009

The pricing strategies requires the pricing setters to make judgments concerning to the prevailing competition, competitive reaction, business conditions and targeted customers, their income, demographics, and many other factors such as corporate objectives, cost, production and distribution.

Many pricing formulas can be reduced to two basic approaches: The commonly accepted price formulas are:

(1) set by allocated total costs, plus a certain standard percentage markup, this is commonly called a full-cost formula where price reflects the average total cost of each unit/plan plus a margin of profit.

(2) Prices are set equal to a certain percentage of product cost at each level of production & distribution. This method, is called the markup formula, it can be ideal for wholesale & retail trade.

(3) Calculate the fixed and variable costs associated with your product or service or Prices are set equal to variable costs plus some amount added to cover allocated overhead & profit contribution.

Also these can be helpful for effective price setting:

* Evaluating the demand Curve, estimate the product’s value to particular market segments and produce a product in line with this estimate

* offer quantities discount to the customers who purchase in large quantities.

* Seasonal discount - based on the time - A short-term discounted price offered to stimulate sales.

* Convince the consuming public that the product price is fair and best value to their money

* Develop pricing policies & strategies that will generate sufficient revenues in the long run to satisfy investors and assure survival, you can maximize long-term profits by increasing market share and lowering costs.

* Sometime a high price signals high quality or a high level of service. Some people may order an expensive item just because it's the most expensive.

* understand how quality demand varies with price? if require you may implement-Value added service

In certain situation you may need to implement price structure to set artificially low in order to gain market share. Once your marketing objective is achieved, the price can be increased.

For consumers, value is the personal thing and that impact to their buying behavior, hence it is to be designed considering the buying behavior, demand of market and prevailing competition that you may come across during your sales and marketing process. However you should be very conscious when deciding price structure for especially a sensitive market and where one or more company having monopoly or acquire leadership of particular product or services. Your approach might be for behavior marketing especially when you target a sensitive market and you can even set a higher price when there is scope of adding value on service.

Guideline for Writing Effective Press Release

W.Randolph Hearst, well regarded American Newspaper tycoon once defined news as being what someone, somewhere doesn't what you to print-all the rest is advertising. Ideally the News may be something that directly affects the reader educates or informs them or in any way changes the existing situation with hidden advertising appeal. A press release must initially relate to something that would interest an average news reader and it should have a forward-looking statements regarding future. While choosing a press release medium make sure to check that particular press release site has a thoughtful reader base and catering your specific niche oriented market. For effective release, the newsworthiness alone and nothing else can make a release acceptable to a news site hence Newsworthiness makes information exciting, acceptable, interesting and memorable.



A press release incorporate a single, coherent message in a matter of fact style with enough background information to authenticate that message. A well written press release has the specific objective of conveying, timely and accurate and genuine information with minimum words- without spelling mistake and grammar and the basic facts are put words in together a clear, easy to understand language, tense and concise style without losing the aesthatic value.

Getting approval for a press release distribution is an easy process but if you are supposed to make release in google/yahoo news they are going to consider background information, worthiness of your news, your site rank and age too, and the relevancy of your informations as a priority. If your content have non-commercial value your site should have contributors from different area and your site must have registered as an organization. Also the writing should have a logical sequence and each paragraph should be precise and contain a single idea. I dont think there is any scope for creative writing, vague conclusions or personal opinion in a news article. A news release is a source of information, not an exercise in writing style.

Checklist; The Eight point of News Release Model from old marketing school which has still importance;

Subject; What is the story about?

Organization; What is the name of organization?

Location; What is the location of the organization, you can add your site url and contact address.

Advantages; What is "New","Special" "Benieficial" about the product or service?

What buyer problems does our product or service can solve?

Applications; How or by whom can the product or service can be used or enjoyed?

Details; What are the specifications or detail about the features?

Source; If this is different from location mention the source of location, such as your office is in US you operate from UK and your branches are in other cities.

I hope these basic guideline is going to help you to make your press release most effective, also before planning for a press release, I would suggest you to know well What is your niche and your target audience? Get it written by a professional writer instead of writing your own.

Benchmarking- To Measure Competitiveness

Benchmarking is a great tools to create a better organization, it help you to create a comparative strategy that measures how a particular business or brand process differs from another one and why particular company is distinctly superior. There are two basic approaches to benchmarking in computing- the “scientific” and "quantitative" approach which are generally being used to find the true reference point for measurement of the effectiveness. There are one of the good reason to follow such measurement because it mostly relates directly to the strong branded product or service differentiation strategy from the very beginning...

Competitive Benchmarking is a process made up of the following steps by which you can measure your own position and you can be able to analyze how other competitors performing well or doing exceptionally well in similar niche?

* Identify what should be Benchmarked, Choose benchmark partners, companies from similar niche?

* Create the goal of the benchmarking process and classify the selective area into classes.

* Identify comparative companies best brand where those performance levels can be measured and the place those functions in question to solve it during benchmarking process.

* Determine data collection method and comparative and comprehensive database, the objective is to know what factors is working exceptionally well with a competitive brand?

* Analyze the discrepancies of yours and what your competitor are missing? Identify the unfulfilled demands of specific market segments.

* Define the future performance levels and follow the key trends

* Determine current performance gap and frame your strategy

* Find the overall gain acceptance and market penetration

* Frame your functional goals and develop Action Plans

* Make improvement plans or new procedures

* Know the factors in advance that can impact the future market.



* Work out your specific actions and monitor progress and plan ongoing benchmark, if you're operating few companies in same niche, go for generic benchmarking and benchmark each company to find the value proposition for each company and the unique class.

Benchmarking greatly help you to differentiate companies in similar niche and also help you to find the USP and stand out being unique in specific class or beyond the class... and let you sustain in even diversified situations.