At first, if you want to add a new product to the market, you should do your best to add value to this product to attract more customers to your market. One of the important ways to add value is “how to price a new product” and ” how the price is fitting the marketing”. so Here, we will explain pricing the product.
Price a New Product in The Market
Market conditions affect the price of the product such as pure competition, monopolistic competition, pure monopoly, and oligopoly. There are a variety of different types of pricing strategies in business so in these following steps, you will be able to make pricing matching to the business model.
Evaluate the pricing environment
Market factors affect the pricing of the product. if the market is filled with companies which have the same activity of yours, you may decide to fight for market share through price. you should put into consideration the economy state this will affect your product.
Define your pricing objectives
Objectives should include what is the company want to achieve from selling the product So Pricing objectives influenced by the organization’s view on market share, sales, competition, customer satisfaction, profit and its image within the market place. The company may want to enlarge sales this may lead to a price war.
Choose a pricing strategy
There are many common strategies for pricing, you should choose one of them:
- Cost-Based Pricing it depends on calculating your costs and adding a mark-up. the desired profit is added to the cost of the product which determines its sale price.
- Competitive pricing it depends on setting a price based on what the competition charges and consists of setting the price at the same level as one’s competitors.
- Value-based pricing it depends on setting a price based on how much the customer believes what you’re selling is value.
- Price Skimming it depends on setting a high price and lowering it as the market evolves.
- Penetration pricing it depends on setting a low price to enter a competitive market and raising it later.
Formulate pricing tactics
They are a set of actions that affect the decision of pricing. Pricing tactics must be considered in relation to the product’s lifecycle. you could depend on a variety of products to acquire a big part of the market and charge a small business.
Assemble a pricing mix
It includes the decisions as to Price level to be adopted; discount to be offered and, terms of credit to be allowed to customers. you should consider discounts, other variables such as shipment costs, tax, terms and conditions, payment methods, payment terms, license fees and so forth.
A decision on Market Targets
The behavior of production and distribution costs. you must put under consideration rate of market expansion, threats of potential competition, and measures to meet that competition. the factors and the decision that is made on promotional strategy are interdependent.
Choice of Distribution Channels
You should choice marketing channels that you will use. this will cost you the costs of using these channels and you will add them to the price of the product. these costs govern the factory price that will result in a specified consumer price and since it is the consumer price that matters for volume.