In the last part of your strategic marketing plan you began the process of defining the marketing mix, starting with the components of product, distribution, and promotion. The next stage of the strategic planning process-pricing-completes the elements of the marketing mix. In recent years, pricing has become a special challenge to the marketer because prices can be quickly and easily compared on the Internet. In any case, your goal should be to make pricing competitive and value-driven, as well as cover costs.
Other features and benefits of your offering are likely to be more important than price. Use the following exercises to guide you through the pricing part of your strategic marketing plan:
1. List possible pricing objectives for your chosen firm. How might adopting different pricing objectives change the behavior of the firm and its marketing plans?
2. Gather information on tactics you decided on for the first parts of your marketing plan. What costs are associated with those decisions? Will you incur more or fewer costs by selling online? Will your marketing costs increase or decrease? Why? Calculate the break-even point for selling your offering. Can you sell enough to cover your costs? Try the break-even calculator at https://connection.cwru.edu/mbac424/breakeven/BreakEven.html .
3. Pricing is an integral component of marketing strategy. Discuss how your firm's pricing can affect or be affected by competition, the economic environment, political regulations, product features, extra customer service, changes in distribution, or changes in promotion.
4. Is demand elastic or inelastic for your company's product or service? Why? What is the demand elasticity for your offering in an off-line world? Whatever the level, it is likely to be more elastic online. What tactics can you use to soften or reduce this on-line price sensitivity?