As important variables in the marketing mix, this paper explores pricing and distribution aspects in marketing. The paper begins with an examination of how pricing and distribution complement each other at Costco bridal shop especially when gowns are available at the retail store. This is followed by an analysis of the implications for positioning and targeting when marketing. The final section of the paper is a discussion of whether Saks, Bergdorf, Neiman-Marcus and other specialty bridal shops should offer discounts and maybe reduce prices.
Pricing and Distribution:
As an extremely important decision for a company, pricing is the only element of the marketing mix that generates revenue. The positioning of a product in the market is dependent on its pricing since customers tend to greatly resist attempts to change price once it has been set up. As compared to other elements in the marketing mix, price is the variable with which a competitive response can be quickly implemented. On the contrary, distribution basically involves the process of getting the product from the manufacturer to the intended consumer.
How Pricing and Distribution Complement each other at Costco:
Costco is a company that has itself as a means with which brides and grooms can create an unforgettable wedding day through reasonable prices. In the past few years, the warehouse store sells all wedding-related accessories including engagement rings, invitations, flowers, and trips for honeymoon. While it's difficult to quantify the actual size of the company's bridal business, Costco has been mainly been growing through its retailer website that enable customers to choose invitations and flowers.
The success of Costco's business is also attributed to the way pricing and distribution complements each other, particularly when gowns are available at the retail store. Through its distribution channels, Costco ensures that wedding dresses are available to customers in several locations. For instance, the company entered into partnership with Kirstie Kelly, Los Angeles designer to provide a wide range of wedding dresses at in-store trunk shows (Berk, 2011). The partnership has enabled the firm to provide gowns to customers at convenient locations through the trunk shows tour across the country.
On the other hand, the firm has a pricing strategy that enables it to offer the designer gowns to customers at reasonable prices. According to its pricing policy, Costco provides wedding-related products at prices that make it easier for customers to have a remarkable wedding without busting their banking accounts. As a result of this pricing strategy and distribution channel that promotes the availability of the firm's products to customers at convenient locations, these variables enable Costco to maintain its profitability.
Implications for Targeting and Positioning:
Targeting is the selection of the actual segment of the target market or group of people that the firm's product is designed to meet their needs. On the other hand positioning is the use of marketing strategies to help people to create a mental image regarding the product. As important aspects of market segmentation, these elements play a critical role and have huge implications on the success of a business. The major implication for targeting and positioning is that it helps in developing the right relationships with the right customers.
For Costco's bridal business, product positioning and targeting have a huge implication for the firm's competitiveness in the bridal industry that was hugely impacted by the recent economic downturn. This is largely because these aspects take place within the target market segment and show how a company can compete effectively within the specific market.
Should Bridal Shops offer Discounts and Reduce Prices?
As Saks, Bergdorf, Neiman-Marcus and other bridal shops are taking note, one of the major concerns is whether these shops should offer discounts and even reduce prices. Since managers know the value and impact of competition, they usually try to provide products with distinctive features through innovative strategies (Bertini & Wathieu 2010). However, price seems to be the most important factor that influences buying decisions because customers have a variety of options that are available in several store shelves. The problem of price being the main influence of consumer's buying decisions is difficult to overcome as many markets are currently mature enough to incorporate price-based competition.
In consideration of whether the specialty bridal shops should offer discounts and even reduce prices, it's important to examine the invested resources and received goods. Actually, the logical analysis for conceptualizing price is that price is determined by the resources given up over goods received ("Pricing," n.d.). This implies that the specialty bridal shops should quantity of products they receive and the money they pay for the products.
In most cases, customers tend to characteristically maintain reference prices for products based on various factors including their perceived fairness of prices, prices they have seen, and prices they have paid in the past. The two kinds of reference prices for products that are maintained by customers are internal and external reference prices. While internal reference prices are those that are based on the customer's experience, the external reference prices are those offered by marketers in order to influence the price expectations of customers.
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