Kotler And Armstrong's Three Different Types Of Pricing Strategies

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Kotler and Armstrong (2014) stated that marketing mix is a “set of tactical marketing tools: Product, Price, Place, Promotion that the firm blends to produce the response it wants in the target market” (p. 76).
The first element of 4Ps is Product. Yudelson (1999) defined product as all the benefits (present or anticipated) that the buyer acquired from the exchange. Product is the goods or services that are created by company and offered in the business sector to fulfill shoppers’ needs. There are two major types of product, namely consumer products and industrial products. Consumer product is the item that purchased by the end user for individual utilization which are classified into four groups as consumer products, shopping products, convenience
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Kotler and Armstrong (2014) defined that price is the amount of money charged for a product or service. Kotler and Armstrong (2014) suggested three major pricing strategies for existing products namely customer value-based pricing, cost-based pricing and competition-based pricing. Customer value-based pricing strategy sets the price based on buyer’s valuation towards a product. Cost-based pricing sets the price by putting mark up over product cost. Competition-based pricing sets the price based on competitor’s strategies. Pricing strategies change as the product goes through various life cycle. Kotler and Armstrong (2014) also proposed two major pricing strategies for new product, namely market skimming pricing and market-penetration pricing. Market-skimming pricing is setting a high price for a high quality and image new product to obtain maximum profit from target segments. Market-penetration pricing is the pricing strategy that sets a low price for a new product in order to secure a larger market …show more content…
Singh (2012) reported that “ Promotional activities are mainly intended to supplement personal selling, advertising and publicity. Promotion helps the trader and sales force to represent the product to the consumers in an effective manner and induce them to buy.” (p. 42). According to Kotler and Armstrong (2014), promotion mix is the precise combination of promotion tools that the company uses to convey customer value winningly and to form customer relationships which consists of five major promotion tools namely advertising, sales promotion, personal selling, public relations and direct marketing. Advertising is a paid form presentation of ideas, goods and images such as Nike’s “Just do it” campaign that seller wanted to induce buyers to buy for it. Sales promotion is a short run enticement such as discounts in a supermarket to encourage the sale of a good and service. Personal selling is a face to face presentation in between seller and buyer for the purpose of conducting sales and instill customer relationships. Unlike other promotion methods, personal selling can communicate with the customers in a more effective way by using the influence of personal characteristics of the sales person. Public relations (PR) is a conduct of establishing good relations with company’s publics via favorable publicity. Public relations are important for a company’s image and also their future. Direct marketing is an act of making straight forward

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