The majority of business experts consider pricing crucial for the product development. Pricing is a challenge for many companies because they consider that correct pricing can intensify the product sales. Some researchers such as Ellickson, Misra, and Nair (2012) believe that revenues received by a company are connected with a certain pricing strategy. Consequently, a company should search for sources of independent variations which are decisive for its pricing strategy and remain active in the market. The price of the product “Allround” was estimated with the consideration of its target customers, competitors pricing, and product quality. Another important component in defining the cost of the product is manufacturer suggested retail price (MSRP). On the whole, the process of product development on the marked includes nine stages.
Promotional Allowance Changes
The development of a product on the market passes some periods. There are some pricing strategies which should be followed. For example, the price of the product will depend on sales volume. Thus, wholesalers will get a bigger discount than retailers. Another issue to consider in pricing is inflation. It influences the cost of raw materials and thus demands the adjustment of final price. At certain stage, new versions of already known products can be launched. The promotional allowance of these products will be similar or identical to the first one. Finally, a company should follow the selected pricing plan. transparent pricing is a proof of company’s reliability.
Promotional Budget and Allocation
During promotion of the company products it is important to consider different inner and outer promotional activities. Promotional budgets should cover four major promotional activities such as cooperative advertising, product display, trial size, and coupons. Cooperative advertisement is one of those strategies that can be profitable for manufacturer under certain circumstances. However, it is possible on condition of fair play of both manufacturer and retailer (Yang, Xie, Dang, Xiong, 2013). During nine periods of our simulation activities, the promotional budgets should be increased. For example, our promotional budgets increased by 297% (from 8.8 M$ to 33.4 M$) within nine periods. Every strategy should be evaluated concerning its level of promotional input. It will help to select the most efficient strategies for the product.
Ellickson, P. B., Misra, S., & Nair, H. S. (2012). Repositioning dynamics and pricing strategy. Journal of Marketing Research, 49(6), 750-772.
Yang, J., Xie, J., Deng, X., & Xiong, H. (2013). Cooperative advertising in a distribution channel with fairness concerns. European Journal of Operational Research, 227(2), 401-407.