Pricing for PDAs are extremely competitive, but the price sensitivity of customers depends on the specific sector that Sonic wishes to target. High end Blackberry products and PDAs for businessmen can run at a very high cost with some PDAs selling at 900 dollars and above. However, low end users who use PDAs for daily personal organization and data management are extremely sensitive to price. Low end PDAs such as those manufactured by Psion can run as low as 150 dollars. Therefore price sensitivity works in conjunction with product quality and brand recognition. Demand is elastic at the low quality end with most producers competing over price and margins are relatively low, on the high quality end demand is usually inelastic, but market penetration is much harder because users demand a high end product that they trust will not break down or malfunction. Therefore brand name products usually occupy the high end PDAs. The implication for the Sonic 1000 is that its pricing must be extremely competitive based upon its overall product quality. If a very strong customer support system can be effectively created and managed along with a very durable product, then pricing could be set a relatively high level. However, since this market is already well saturated, competition in each level of product quality and price range will be extremely intense, it is necessary to select a price sector and a quality level and then carefully evaluate the margins of the product.
Price adaptations should be based on several different factors. First, base units should be priced at a significantly lower level than the actual "as shown" price. This will allow users who demand minimal functionality a very cheap and effective product while allowing Sonic to still maintain satisfactory margins. However, for upgrades such as additional...
Customers who are willing to pay for a better quality product are usually much less price sensitive and much more quality focused, thus charging more for these additional upgrades should not significantly impact overall sales. Within marketing plans, the pricing should always reflect the base unit price, and price adaptations should be based on the target market. However, offering low cost upgrades can be an effective marketing campaign because it increases the perceived quality of the product while providing minimal actual production cost. Competitors use a myriad of different tactics to create attracts buyers. Psion for instance offers discounts for multiple purchases with discounts of up to 30% for buyers who look for bulk purchases. Other companies such as Dell Axim provide bulk discounts based on multiplatform purchases, such as steep discounts for purchases of a desktop as well as PDA. Another method that is extremely popular is offer tiered pricing for students, military personnel and special groups. Discounts for special groups usually result in more bulk orders especially from educational institutions which allow high profit margins without having to spend high costs on marketing.
A psionteklogix. (2006, September). Retrieved September 22, 2006, from http://www.psionteklogix.com / iPAQ Repair. (2006, September). Retrieved September 22, 2006, from http://www.ipaqrepair.co.uk/
Dell Axim. (2006, September). Retrieved September 22, 2006, from http://www.dell.com/content/topics/segtopic.aspx/vanity/axim?c=us&l=en&s=gen fujitsu-siemens. (n.d.). Retrieved September 22, 2006, from http://www.fujitsu-siemens.com/products/mobile/handhelds/index.html
