Question

Formulate the outline of a precision pricing policy for a four-star hotel designed to accommodate business guests as well as tourists from all over the world. Explain your answer

Answer 1

Precision pricing polcy is the policy in which Pricing has become much more difficult in competitive world nowdays. It provides managers with a comprehensive framework for a more effective pricing strategy and a set of realistic tools for increasing profits through better pricing.

There are some steps to create effective pricing policy stratigies for a 4 star hotel designed to accommodate business guests as well as tourists from all over the world.

Step 1: Determine your business goals.

As the 4 star hotel, we need to determine How you make money everything about your marketing and sales GTM strategy. the following business goals as a determinant for the basis of pricing:

• Increase profitability
• Improve cash flow
• Market penetration
• Larger market share
• Increase revenue per customer
• Beat the competition
• Fill capacity and utilize resources
• New product introduction
• Reach a new segment
• Increase prospect presence
• Increase prospect conversion

Step 2: Conduct a thorough market pricing analysis.

While the first step is grounded in your business goals, this step ensures that your pricing strategy considers the context of the market in which your product or service will compete. "Low cost providers like Walmart often market to a broad audience while high cost providers like Tesla market to a specific audience." If your market and product are broader with many players who offer similar products or services, chances are you will compete on price. You will "need to do everything to keep operational costs down to ensure a maximum profits margin," says Christof. Conversely, if you have a high value, highly differentiated product or service, your offering may be more conducive to premium pricing, which lends itself to a different form of targeted marketing. "With a superior product, it is important that you are able to place emphasis on high quality marketing and customer service," says Christof.

Step 3: Analyze your target audience.

As the 4 star hotel, This steps enables you to answer why, what, and how customers will use your product or service based on their specific and urgent needs. "Be guided by the most important question: what perceived and real value does my product or service bring to the customer. What is the task they are facing? How does my product or service ease the pain associated with this task? What does my customer have to gain by using my product or service?" says Christof. Your pricing model and promotional campaigns must align with why your customer would buy your product. For example, if you have a best-of-breed product that uniquely fulfills a customer's urgent needs, value-based premium pricing may be the best strategy. Creating low-cost promotions and giveaways will confuse your customers, undercut your value, and shrink your profit margin.

Step 4: Profile your competitive landscape. Whether you are a low-cost provider or a differentiated vendor, the pricing model and price point of your competitors is a significant pricing strategy influencer.

Step 5: Create a pricing strategy and execution plan. At this point,we have gathered enough information to formulate an action plan. these are identified 10 pricing strategies to consider based on your market, customer, and competitive analysis:

• Penetration pricing: Price is artificially low to break into the market
• Economy pricing: Everyday low price with the focus on low manufacturing/delivery cost
• Premium pricing: High price for high value
• Price skimming: Go into the market with a high price, but once your competitors follow, lower your cost and implement other pricing strategies
• Promotional pricing: Discounts over a period of time, one-time deals
• Psychological pricing: Price products or services which triggers action. For example, charging .99 instead of $1.00
• Versioning: Offer different tiers for your services or products: good, better, best
• Sandwich pricing: High, medium and low priced item with the intent to drive customers to the medium priced item
• Competitive pricing: Set the price equal to what your competitors are charging and win the service game
• Value pricing: Understand the value for your customers and their willingness to pay. Also understand what alternatives do they have

After you have completed the five steps, take the time to work the steps backwards. This will help 4- star hotel designed to  ensure how to accomodate business guests as well as tourist.