Essay Sample on Pricing Strategy for Project 28: Key to Growth Success

Introduction

With the knowledge that project 28 is a new player in the market with giant competitors, detailed thoughts and planning are essential when crafting a pricing strategy for our products. The most crucial part is deciding on the right entry pricing strategy of the industry products. It is also essential to understand that the pricing strategy adopted by the Projet Vingt-Huit company will have an amazingly massive impact on the profits and determines the rate at which the company grows (Bastos, Silva, & Verhoogen, 2018). More so, to formulate the best pricing strategy for project 28, we have made the companies short-term and long-term goals very clear and straight forward. Therefore, the purpose of a pricing strategy is to help understand the considerations for establishing a price for the product in project 28.

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Due to the nature of the company as compared to the other industries producing similar products, the best entry pricing strategy is the penetration pricing. By adopting this entry strategy, the company will be able to capture a share of the market. Winning a percentage of the market will be possible by initially offering the customers products at lower prices. Once the company attracts a larger share of the market, we will be able to exploit the economy of scale by producing a large number of products and thus open up a wider profit margin (Bastos, Silva, & Verhoogen, 2018). In addition to the increased economy of scale, the market will become familiar with our products, accept id, and ultimately rely on our products for maintaining their skin. However, this strategy is expensive and takes deep pockets to implement. When compared to the prices of other companies like L'Oreal, which sell their products as low as $10, the penetration price for Projet Vingt-Huit should be set at $20 to slash a share of the market from the other incumbent competitors. Additionally, this setting of the market entry prices by project 28 company will determine how the customers will view the:

• Quality and capability of the product
• Who can buy the product
• The ability to disrupt the competitors

Premium Pricing

After successfully entering the market and having a good market share and loyal customers, we should then increase the prices of our products, which are: Le Nuit, Le Serum, and Le Jour. The gradual increase in rates should come after we have done enough market research and study our customers properly to ensure that we don't lose most of them after hiking the prices (Bhasin 2020).. The prices should be increased gradually from the initial cost of $20 up to an optimum of $85. We have reached at this optimum price by identifying the price at which customers are willing to buy our product.

Moreover, being a patented technology that produces luxurious products, the biomimetic anti-aging care, the projet Vingt-huit company, setting the optimum price at $85, is one way of proving the customers that our products are of proven good quality beyond any doubt. In addition, Professor Denis Barritault, who is the masterpiece of our company, is a well-known and reputable researcher who has spent most of his life in scientific research. The quoted amounts will cater to production, marketing, advertisement, and transport cost of the product to the market.

Also, due to the nature of our company that opts not to advertise the products on the website and online market but chose to rely on the pharmacies for distribution and customer education, the best wholesale or bulk buying price for the pharmacies and other customers is $50. The position of these retailers in marketing and advertising for the products cannot be underestimated. The pharmacies pay for the transport cost, taxes, and rent and, more so, offer a very important service of educating the customers on the products.

For the customers who buy the three products together, a discount of 5% should be given, and thus the customer should buy all the three products at $240. For the customers who subscribe in and buy on our company's website, the customer should get our products at a lower price of $70 per product. For the repeat customer bonus, the customers who repeatedly buy from the company should be offered a 1% discount. The repeat customers should be monitored by providing them with a smart card which is electronically fed to the company's computer systems.

Advantages of Premium Pricing

• Increased profits - There is increased profits by selling a single unit or product as compared to setting lower prices.
• Higher competitive edge - This strategy will enable a competitive advantage over the competitors who set their prices too low. This is simply because most customers equate the quality of products to the price.
• Increased brand awareness - Premium pricing will make our products look prestigious in the eyes of the customers and thus increasing awareness of the products.

Disadvantages of Premium Pricing

• The high cost of marketing - By adopting this pricing strategy, we will, in turn, have to invest more in marketing and advertisement.
• Limited customer base - This means that only customers of middle and high social, economic status can afford the products, thus limiting the customers who can buy from our company.
• Premium price stays with the product for its whole life - it is not good to set a premium price and later lower the price as this will make the customers doubt the quality of the product.
• There are fewer sale volumes - If we chose to use the premium pricing strategy, then we have to be satisfied by selling limited total sales volumes. Pursuing aggressive sales and premium pricing at the same time becomes difficult.

Conclusion

Although this strategy is the best for our company, we have to ensure that we always produce premium valued products, define the value of our products, reduce the discount games and put an extra effort in providing luxury products to customers (Bhasin 2020). Also, we need to make our prices fixed and avoid lowering them even when faced with low sales.

References

Hitesh Bhasin. (2020). Premium Pricing: Definition, Strategy, Advantages. https://www.marketing91.com/premium-pricing/

Dwivedi, A., Nayeem, T., & Murshed, F. (2018). Brand experience and consumers' willingness-to-pay (WTP) a price premium: Mediating role of brand credibility and perceived uniqueness. Journal of Retailing and Consumer Services, 44, 100-107.

Hinterhuber, A., & Liozu, S. M. (2018). Thoughts: premium pricing in B2C and B2B. Journal of Revenue and Pricing Management, 17(4), 301-305. https://www.deepdyve.com/lp/springer-journals/thoughts-premium-pricing-in-b2c-and-b2b-oL8M9MBfbv?impressionId=5d4559fa65b5b&i_medium=docview&i_campaign=recommendations&i_source=recommendations

Jordie, B. (2019). Premium Pricing: How to drive sales in 2019. https://prisync.com/blog/premium-pricing/

Bastos, P., Silva, J., & Verhoogen, E. (2018). Export destinations and input prices. American Economic Review, 108(2), 353-92.