Pricing Structures the Company Has

Pricing Structures The company has to select a specific pricing structure from the following set of five distinctive pricing strategies, as revealed below: New-Product Pricing Differential Pricing Psychological Pricing Product-line Pricing, and Promotional Pricing Each pricing strategy is characterized by its own advantages and disadvantages and the final decision has to be based on the comprehension of these features, as well as on the identification of the specific strategy which best serves the current needs of the organization.

In this order of ideas, the following lines reveal the advantages and disadvantages of the five pricing strategies: New-Product Pricing Advantages: Reveals an increased ability to quickly attain the established objective. Specifically, if the scope is that of selling the product to as many customers as possible, the implementation of a lower retail price would attract customers. Also, the scope of quick profitability can be attained with the aid of a higher retail price.

Disadvantages: The main disadvantage is that the new product pricing strategy manages to attain organizational goals only on the short-term. As the sensation of novelty wears off, it reduces the ability of the continued pricing strategy to attain the initial goal. If for instance the goal was that of increasing market share through lower prices, the outcome would be that of decreased profitability.

Vice versa, if the goal was that of increasing profits through high retail prices, the outcome would be that of lowered sales as a result of decreased customer access to the product or the simple unwillingness to pay more for a product. The strategy has to be changed and replaced with a more sustainable one in the long-term. The procedure implies additional costs and additional complexities. 2. Differential Pricing Advantages: Considers and reflects the differences between products and the mechanisms involved in their manufacturing and sale.

This advantage makes the strategy applicable in the establishment of the retail prices used in the traditional sales method as well as in the televised sale. Disadvantages: Not suitable when only implemented by a single organization, to sell the same product through specific channels. Often, the products sold through telemarketing retail at prices higher than the same products in stores, meaning as such that people would seek the product in stores, and the televised effort would be a simply advertising one. 3.

Psychological Pricing Advantages: Draws higher numbers of customers Appeals to basic human instincts and it is highly related to impulse buys Disadvantages: It can be considered as unethical Customers who see through the intention and the psychological manipulation of the firm could develop a reaction opposed to that initially intended by the firm. This virtually means that the company's reputation could suffer demises.

Telemarketing efforts are often constructed on impulse buys and psychological pricing, such as $19.99 instead of a round $20.00 or a "limited offer" deal in which the price is reduced from $30.00 to $19.99. This context makes the psychological pricing strategy suitable for the company. 4. Product-line Pricing Advantages: Sets a single unique price on all products coming from a product line, reducing as such the complexities which come from setting different prices and using differentiated strategies for each product category Pushes towards the lowest retail price possible and generates as such customer satisfaction.

Additionally, through increased consumer satisfaction, higher levels of volume sales are generated. Disadvantages: Damages the organizational productivity and profitability Denies the existence of differences between the products Forces down the quality of the items by strengthening on the importance of a low retail price The prioritization of the low retail price on the product line damages the product and the consumer by reducing the quality of other components Given the nature of the products the company manufacturers -- sports apparel for both males and females.