Appendix 4
How to Use Pricing as a Marketing Strategy By Jeanne Grunert, eHow User
Price Can be an Important Marketing Strategy Product, price, place and promotion form the cornerstones of any marketing strategy, yet one aspect - price - is perhaps the easiest and most flexible aspect to test and measure its impact on marketing success. Pricing is both an art and a science, and marketing decisions regarding pricing items are based both on sound market research as well as instinct. Based on over twenty years of marketing management experience managing various retail firms, here are some guidelines for using pricing as a marketing strategy or as part of a marketing plan.
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1 Begin examing the prices of similar items sold by competitors. For bricks and mortar stores, you need to visit competitors stores once per season. Examine items that are similar or the same as ones you are selling and note prices and discounts. For online retailers, shop major categories. It may be helpful to create a rudimentary spreadsheet in Microsoft Excel to track prices.
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2 Look through newspapers, magazines, and other forms of advertising and note how your competitors are using discounts. Are they giving out coupons or offering one day sales?
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3 Next, examine your own markup policies. What is your markup range? Do you even have one? Markup is typically calculated by multiplying the wholesale cost plus the shipping costs by a number to get the retail price. The retail price has to account for overhead, marketing costs and profit. Typical markups are 2x wholesale or more for luxury goods. Are your markups pushing your retail prices too high, or perhaps too low?
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