How,Do,Companies,Use,the,Price,Strategies_Do the dishes

　　１．Introduction 　　With the development of the globalization, companies face many challenges. Pricing strategy is a part of their marketing efforts. Price is the only element in the marketing mix that produces revenues; all other elements re present cost. So pricing and price competition is the number-one problem facing many marketing executives. To select an initial price, companies should using pricing
　　methods based on the cost of the products, the competitors" price and the perception of customers.
　　After reading many books about marketing and looking up data on internet, the title of this thesis" How Do Companies Use the Pricing Strategies" was defined. The marketing theories come from some work, such as Principle of Marketing; Marketing; and contemporary marketing and so on. In this thesis, there are three chapters. ChapterⅠintroduces nature and importance of price, including what is price? ; Price as an indicator of value and price in marketing mix. Next chapter introduces general pricing approach, consisting of cost-based approach, value-based approach and competition-based approach. ChapterⅢ introduces the main price strategies. Such as what pricing strategies are used when company presents its new-product; what pricing strategy do well-known company adopts and other adjusting pricing. And this thesis gives some examples to interpret these pricing strategies. The thesis also analysis how those companies select pricing strategies according to the situation and gain their objectives, While most of companies don’t purely depend on the one ways of pricing strategies. They may choose several pricing strategies. The company should select pricing strategies suited for them.
　　Sum up, company should pay attention to many factors in determining price.
　　1.1What is price
　　In the narrowest sense, price is the amount of money charged for a product or service. More broadly, price is the sum of all the values that consumers exchange for the benefit of having or using the product or service.
　　From a marketing viewpoint, price is the money or other considerations (including other good and service) exchanged for the ownership or use of a good or service.
　　Price plays two essential roles: 1) to affect consumer perception; 2) to be used in capacity management .Price is the only part of the total costs consumers pay in an exchange. The total costs of an exchange include time and mental and behavioral effort, as well as the product‘s monetary price.
　　1.2 Price as an indicator of value
　　From a consumer’s standpoint, price is often used to indicate value when it is paired for the perceived benefits of a product or service. Specifically, value can be defined as the ratio of perceived benefits to price, or.
　　Value=Perceived benefits/Price.
　　This relationship shows that for a given price, as perceived benefits increase, value increase. Also, for a given price, value decreases when perceived benefits decrease.
　　For some products, price influences the perception of overall quality, and ultimately value, to consumer. For example, in a survey of home furnishing buyers, 84 percent agreed with the following statement: “the higher the price, the higher the quality”.
　　Consumer value assessments are often comparative. Here value involves the judgment by a consumer of the worth and desirably of a product or service relative to substitute that satisfy the same need.
　　1.3 Price in marketing mix
　　Price is also a critical decision made by a marketing executive because price has a direct effect on firm’s profits. This is apparent from a firm’s profit equation.
　　Profit = Total revenue � Total cost or.
　　Profit = (Unit price * Quantity Sold) � Total cost.
　　What makes this relationship even more important is that price affects the quantity sold, Furthermore, since the quantity sold sometimes affects a firm’s costs because of efficiency of production, price also indirectly affects cost. Thus, pricing decisions influence both total revenue and total cost, which makes pricing one of the most important decisions marketing executives face.
　　Professor Neil put forward the concept of marketing mix in1964.While another professor summarized the marketing mix as 4P’s-Product, Price, Place, and Promotion.Price plays two major roles in the marketing mix: 1) It influences whether purchases will be made and, if so, how much of a product consumers or organizations purchase. In general, potential customers seek a price that will result in positive value from the exchange. They may also consider the price relative to that of competitive offerings. 2) It influences whether marketing products will be sufficiently profitable. Even small price change can dramatically influence profit.
　　The importance of price in the marketing mix necessitates an understanding of six major steps involved in the process organization go through in setting prices.
　　・Identify pricing constraints and objectives.
　　・Estimate demand and revenue.
　　・Determine cost, volume, and profit relationships.
　　・Select an approximate price level.
　　・Set list or quoted price.
　　・Make special adjustments to list or quoted price.
　　２．Conclusion
　　On the fierce competition age, pure quality and technology don’t determine the price. In fact, company also considers other factors, such as brand image, service and so on. When bringing out an innovative product, company should think over all internal and external factors. One important internal factor, the pricing strategy, is largely determined by the company’s marketing objectives. Pricing objectives often include survival, current profit maximization, market-share leadership and product-quality leadership. In addition to meeting these objectives, price decisions must be carefully coordinated with the marketing mix strategy. Pricing is only one of the marketing-mix tools that a company uses to accomplish its objectives and pricing decisions affect and are affected by product design, distribution, and promotion decisions.
　　External factors that influence pricing decisions include the nature of the market and demand; competitors’ prices and offers; and other factors such as the economy. Reseller needs, and government action. The amount of freedom a seller has in pricing varies with different types of markets, and markets characterized by monopolistic competition or oligopoly is especially restrictive.
　　Ultimately, consumer perceptions of price and value determine whether the company has set the right price. If the price is higher than the sum of the perceived values, consumers will not buy the product. Consumers differ in the values they assign to different product features, and marketers often vary their pricing strategies for different price segments.
　　The initial price may change when company to meet different considerations and expectations in different market. In a word, company must carefully consider a great many elements before choosing the price strategy. Or the company may be failure.■
　　
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