After having done the PDA Simulation Feedback Loop for several times, there was a realization about how important pricing strategies are in marketing. It is made clear that effective pricing strategies may determine the success or failure of a product in the market. It was also realized that it is essential to know how to listen to the consumers’ preferences and responses to particular products. It should be borne in mind that no two products are the same.
Every product is unique and so it is essential that different pricing strategies must be utilized to ensure maximum sales of the product. For instance, when a product is being marketed as a premium product, the company can sell it at a higher price at a higher profit margin. On the other hand, when the product is being marketed as a product for the masses, the company can only sell the product at a lower price and rely on the volume of sales to recoup its investment.
Based on these principles, the following core strategies were utilized: 1) To be able to attract as much number of customers for handheld X5 (Scott Allen, 2002). Compared to the previous strategies, however, the price of handheld X5 was not immediately reduced based on the realization that customers are attracted by its low price and so there is no longer any need to reduce its price. 2) To be able to improve the quality and features of Handheld X6 based on the realization that the customers are attracted in this product because of its quality and performance (Ivana Taylor, 2008).
Compared to the previous strategies, the price of this product was increased by $20 for higher profit margin since this product is being purchased because of its quality and so its limited clientele will purchase it anyway regardless of its price. 3) To be able to continue the development and improvement in the handheld X7 to attract more customers. Compared to the previous strategies, the price of this product was not immediately reduced but was made to depend on the market response to this new pricing strategy.
These strategies were considered effective as the score obtained for this test which is 1,238,555,321 was substantially however than the previous tests which is 1,232,468,405. A comparison was made between the Market Saturation Report the last time it was done, it showed that while there were similarities for handheld X5, there was substantial improvement for X6 and X7 which establishes that the company was able to sell its products to more new customers. The objective therefore of reaching to as many customers as possible was achieved. Below is the Market Saturation Report for X5, X6 and X7 as Figure No.
1 Figure No. 1 The Financial Report was likewise encouraging. Compared to the past simulation, the Profit Report showed that there was a substantial improvement in the performance for X7, to wit While there was substantially the same performance for X5 and X6, there was however a marked increase in the profitability for X7 Conclusion For this exercise, profit was increased by more than $6 Million. It can be said that performance for this test was better despite the fact that one product was reaching its maturity stage and one product started selling at a loss.Better profitability resulted from better pricing strategies and differences in strategies for each product.
Bibliographies Allen, Scott (2002). “Pricing Strategy. ” About. com. Retrieved 13 June 2009 from: http://entrepreneurs. about. com/od/salesmarketing/a/pricingstrategy. htm Taylor, Ivana (2008). “8 Pricing Strategies You can Implement Right Now. ” Retrieved 13 June 2009 from: http://www. smallbiztrends. com/2008/08/8-pricing-strategies-you- can-implement-right-now. html/