The United States has experienced inflation, recession, increased unemployment, and escalating gas prices during the past decade. Over the past 5 years, the country has started toward decreased unemployment, leading to a stronger economy. During the recent recession, the discount store industry started to enjoy sales increases despite company shutterings of grocery and retail store chains. During the down economy, marketers often experiment with various tactics to entice consumers to buy. Cars come with free or cut-rate services; buy a gift card for a friend, and get one free; and the supermarket is full of 2-for-1 specials each week.
Discuss the following:
- Choose a product and its marketing campaign that targets buyers in a down or up economy. Discuss the details of the campaign. Depending on the product, does the campaign offer more deals or promotions during a down economy and less promotions during an up economy? Explain.
- How is the product or service priced? What type of pricing strategy does the company implement? Explain the pricing strategy and how it can contribute to increased sales for the company.
- Is differentiation still important for a company or brand during a recession? Why?
The following information is provided to help with your assignment:
Pricing is the money charged for the product or service that a company is selling. The process of pricing includes determining what monetary value your company will receive in exchange for the product or service.
Company profits are dependent on how a product is priced. Pricing a product or service is often one of the most challenging activities for the marketer and needs to be constantly monitored and changed based on market factors such as cost of materials and labor.
One of the first considerations in product pricing is based on knowing what your customer is willing to pay. This is another reason why understanding your target market, customer demographics, and psychographic characteristics is so important.
For example, a luxury item such as a sports car may be aimed at an affluent, upper-class customer market. A customer who earns $200,000 per year or is worth $1 million is most likely to pay top dollar, maybe $80,000 to $100,000 for that car. Therefore, a high-end pricing strategy would align with this customer group.
Several pricing strategies exist. Marketers need to match the pricing strategy with the target customer.
For more details on pricing strategies, click here.