Description
Pricing Decisions
The price of an item is an important component of decision making in procurement, but is not the only factor for a final decision. Write a three- to -four page, APA style paper that reviews the overall components of a pricing strategy. Include examples from external research to support your views. Describe a company that has used a purchasing strategy to improve the financial impact of the company.
Explanation & Answer
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Pricing Decision
Introduction
Pricing decision- (Pride and Ferrell, 2011). Price is the value paid for a product or service
in the market; it is a key element in the marketing-mix and one that generally is the only variable
that can be quickly changed to react to market changes such as competitor actions or demand
variations.
Body
As observed across several business disciplines, there are fundamental elements that are involved
in the development of a pricing strategy. It is therefore advisable to create a pricing blueprint that
examines the costs, the pricing goals and the competitive pricing. Clear knowledge and
awareness of these elements is very helpful when it comes to reviewing and possibly modifying
the current model of pricing. According to Ivana Taylor (2008) there are different components in
pricing strategy as Mohammed, R. (2005) elaborated these are;
The Nine and Zero Effect. People associate the number nine with value and zero with quality.
Look at the difference between fast food and a gourmet restaurant. A burger meal can sell for
about $4.99 while a gourmet entree at the best place in town may go for $30. So the psychology
of pricing isn’t so much about gaining additional sales because the price appears to be lower, it’s
about what the price communicates about your offering. So which do you want to communicate?
Value or Quality? Now you can price accordingly.
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Payments to Promote Satisfaction. Anyone who has ever paid for a gym membership and quit
the second month has been part...
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