Walmart Pricing Strategy?

Product pricing strategy?

• how do the following affect product pricing: a. state of being signature (signature vs.generic) b. middlemen c. product substitutes d. company strategy

• Answer:

  a) Well a signature product is going to have a higher price than a generic product. This is mostly due to the fact that products become signature products and are marketed as such because of the high demand for that product. Nike, Gucci etc are all designer items which mainly show: 1) how much money you have 2) how "in style" you are The higher the demand, the higher the price, therefore stores that are selling products which are signatures will sell them for more than their generic counterparts. b) middlemen reduce the product price because they lower opportunity costs for both the company and the client/shopper. The middleman is trained in this sort of job and can find information that fits both parties with relative ease compared to how the parties want to collaborate on their own. Since the opportunity costs are low, so will be the product pricing! c) Product substitutes are what the people have and what the companies watch out for. An example, if a person has a certain amount of income and likes to buy a certain type of car (say a subaru) but then suddenly has some payments to make which he oversaw before the person may now find the subaru particularly expensive. Therefore, he may substitute the subaru for say, a smart car. Since this fellow in particular likes smart cars as his second favorite car and he can now afford it with relative ease, he makes the switch. Companies that make products know this and they will adjust the prices on their products to try to stop customers from substituting out of their product for one from another business. d) Company strategy takes in to affect all of the factors above but also includes looking in to other companies and seeing their modes of operation. Insight in to what works and what doesn't in attributing prices to goods and services is essential if the company wishes to succeed. Usually through this the company tries to set up a strategy which makes their product seem desirable so they can reap as much profits as possible but also that their product is the proper price range and works well so that they can also reap the rewards of continual shoppers. Hope this has helped!