Question

Marketing Management

Please describe two products or services that you have purchased recently, one product or service that you feel represented good value for money, and one that did not. What adjustments to the pricing strategy would you recommend in relation to the product or service that failed to provide good value?

Answer 1

I purchased a service and a product. I was satisfied with the service but not with the product. The service that I purchased was a Groupon deal dinner voucher. I found it a good value for money. It was priced at 25 USD for a 3-course meal for two people. The restaurant ambiance was amazing. The food quality and portion size were also worth appreciating. Even the staff members were very polite and courteous. I can say, the overall experience was amazing. So, for this service, I feel it was a good value for money.

I purchased a daily-wear foundation from Mac. The price is around 55 USD. I feel that it did not represent a good value for money. There are other foundations like Fit Me from Maybelline. It is priced at around 20 USD. It is an equally good product and can be used for daily make-up. I have used both of them and I feel spending 55 USD for Mac product is too expensive. Now let us discuss the pricing strategy part. below mentioned are some of the common pricing strategies used in business.

1. Pricing at a Premium - This is mostly true for businesses that sell unique goods. In this strategy, the cost of the product or service is set higher than the competitors.
2. Pricing for Market Penetration - It aims at offering lower prices to attract a large number of consumers. This increases awareness about the product and thus helps in market penetration.
3. Economy Pricing - This strategy is mostly used by companies whose marketing and production cost is low. They provide products without frills and attract price-conscious consumers.
4. Price Skimming - According to this strategy, when the unique product is introduced in the market, it is highly priced. But as soon as the competitors appear, the company lowers the prices.
5. Psychology Pricing - This strategy uses the psychology of consumers. According to psychology, consumers pay more attention to the first number in the price tag. So in this strategy, if a product is of 200 USD, the price is set to 199 USD to create a psychological illusion for the customers.
6. Bundle Pricing - In this strategy, if you buy multiple products that are bundled together, you will have to pay a lesser price. Complimentary products are an example of this strategy.

So, now coming to the foundation from Mac. Mac generally follows 'Pricing at a Premium' strategy. But now there are competitors available in the market who are producing equally good quality products. According to me, Mac should start using 'Price Skimming' strategy to stay competitive in the market and also increase the customer base. Whenever it launches a new product, it should have a higher price. This will attract early adopters (a category of consumers) and gradually the price should be brought down to increase the customer base.