Essay on Effects of pricing strategies in business decisions

            The article is related to the pricing policy of a new product. The new product is going to be introduced in the market with the status of a competitive attitude. The economic evaluation is going to move towards effective pricing strategies that bring the innovation at a high level. From competitive inroads, protected distinctiveness protected the product to progressive degeneration.

        The new inventions and innovative products must be introduced in the market as industries are getting fed up with old products. As a result of this, sales of the product are also going down. Thus, to enhance the sale and capture the maximum share of the market, the innovation must be ensured in the product. The overall market is going to accept the innovation to gain maximum return. For the competitive environment, the new product is going to be the main target. Competitor companies may come up with new products and substitutes in the market that can cause a tough competition in the market.  As a result of this, the market would have a narrow gap between the substitute and its main product.

        If there are just a few rivals in the market. Then the settlement of the product pricing is going to be very difficult.  Seller zone of pricing discretion is very small due to its specialty. Different changes are required for the adjustment in the pricing policy of the product. In this cycle, in distribution, cost of production, price elasticity, and promotional impact show continual changes. There are three maturities that are going to explain pricing over the development cycle of the product. These maturities are competitive maturity, market maturity, and technical maturity.

        Increasing stability in the price structure and market share are included in competitive maturity. Basic service idea for consumer acceptance moves to the manufacturers of the product with great satisfaction and compare the brands with sophistication and familiarizes. Technical maturity is related to the increasing stability of the manufacturing process, knowledge, increase standardization among brands and declining rate of product development.

        These all components are collectively focused on the new product and its innovativeness. The market is ready to get development. While other competitors are present in the market.  Somehow, the entrance of competitors is going very technical and market going to accept them after the introduction of the new product. The economic environment is recognized in an effective manner, therefore, it is predicted that the use of the new product will result in the increase of profitability in the market. Introduction and business of new and the innovative gadgets in the market will support rapid development of innovative market. For instance, the feasibility of use in electric accessories increases the usage and sales in the market among customers.

        But the main issue arises at this point. The research cost may go to increase because, for product differentiation, rich opportunities must be provided at the development stage of the product. So market must manage all the cost factors because of some extra expenses for the industry. Price issue for the products are related to the increase of cost. Prices are going high if they bear heavy cost during their development. Pricing strategy must depend on the situation of the market and also depend on the economic environment of the country.

        The ease of competitive entry and market acceptance are the two main forces that explain the rate of degeneration according to technical factors. Ease of competitive entry means that economic condition and market condition allow new competitors to enter the market and increase the competition but it also depends on the demand and requirement of the product among customers. Market acceptance also explains what type of buyers are willing to buy the product while giving importance to its quality and cost. So it depends on the nature of the product.

        Settlement for pricing creates a problem when the product is ready for proving to customers. Basically, many factors are involved in the price setting. For instance, price must include all the costs of the product that industry bear in its production. Product is required to compete in the market so its price must compete with its competitors and also give a positive response to the market to create a healthy environment of competition. Then price is also affected by the demand of the product because demand affect the sales of the product. If the sales are going high because of increase in demand then the market will produce high profit for the organization. Moreover, it will also cover all the costs and make the competition in a positive direction. Demand present through preferences of the consumer and their priority of selecting the product.

        Then also determine the competitive range of price that can be manageable for the product and also for its substitute. This competitive range should be profitable to a specific margin.  So the utilization of consumer and their response also considerable for the pricing strategies of the product. The pricing strategy decision also depends upon the target markets because the environment of the market and consumers of that market are also very effective in determining the price of the product and follow the pricing strategy.

        So the basic reason for selecting this article is that it includes all the discussions about the product pricing and what are the factors that affect the pricing strategies of a product. Article also determine the market effects and market factors that bring changes in the product pricing such as, how the substitute of a product change the pricing strategy. Demand and sales get influence in accordance with the demand and requirement of the customer and cost of production (Dean, 1976)

Reference of Economics

Dean, J. (1976). Pricing Policies for New Products. Retrieved from https://hbr.org/1976/11/pricing-policies-for-new-products