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In: Operations Management

Samsonite generally follows a value-based pricing strategy. Explain the type of value-based pricing strategy Samsonite is...

Samsonite generally follows a value-based pricing strategy. Explain the type of value-based pricing strategy Samsonite is using. And briefly explain the different internal and external factors impact marketers pricing decision.

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Expert Solution

It is true that Semsonite follows a value based pricing strategy as one of its both product and marketing strategy to set up their prices. Value based pricing strategy is one of the ways in which the prices are being set in the manner the customer's has percieved the price to be. It is a customer-focused pricing which means organisation would set a price in accordance with how the customer is feeling the worth of the product is.

And it is true in the case of Semsonite. The main reason of the growth strategy of Semsonite has always been to target different customers of the market with providing different price points as what they percieve it to be. By segmenting the market and analysing the research they conduct of various users and customers, they set the price in accordance with the different perceptions customers have for their travel bags which makes them grow eventually.

Different internal as well as the external factors which influence the pricing strategy of the organisation are:

1. Economy or the Market: Economy or the state of the market is one of the external factors that is being taken care of before setting the price of the goods. For example, in this time of covid-19, the essential goods are being selling out a price lower than the standard price becausw the government asked them to sell it at this price. It is one of the external factor.

2. Competitiors: Another external factor could be the competitior's price. An organisation more or less set their price in accordance with what the competitor's have set their price, it could be more than their competitior's, less than them or could be equal to them to survive in the market.

3: Objectives of the Business: One of the internal factor that affects the pricing decisions of the product is the objective of the business. If the objective of the business is sales maximisation, the prices would be set lower than the organisation's whose objective is profit maximisation as their prices would be set higher.

4. Cost of the products: At last, one important internal factor which decided th price of the product is the cost of the product situated. Most of the firms rely on this strategy to mark up their price which is basically an addition of all the costs associated on the product + a markup % of the price that could be for example 10% of the cost would be set additional to determine the price of the product.


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