Choosing Alternative Pricing Strategies


This report aims at studying one of the variables in marketing mix. The variables selected for this study is Price. Marketing mix is the combination of price, place promotion, and place of things in marketing. Pricing decision is a crucial factor which is required to take quickly in the changing market environment.


Pricing involves two stages of decision making. One is about pricing decision and other one is about setting price. Pricing decisions have an important role in marketing activities. The price a company charges for its product or service are an important factor in determining sales. The overall marketing strategy of the company must be considered while taking pricing decisions.

Pricing Decision

Price is the most flexible marketing mix variable and prices can be changed according to the market situation. It is important to change price to make advantage of quick demand or to respond to the competitors pricing decisions. Setting the right price is important for generating revenue. Pricing decision must be made after sufficient research, analysis and strategic evaluation. Prices cannot be set too low or too high.

Both of this practice may hinder the growth of profit to the firm. It is important to know whether the customers are avoiding the product just because of price. Customers first impression is important when they compare with the value offered and price fixed. Price adjustments are considered as an important part in the sales promotional activity. But continuous increasing or decreasing prices may affect the business as sometimes customers may anticipate decreasing of prices and with hold their pricing decision..”

Factors affecting pricing decision

Internal factors:-Internal factors are mostly controllable factors. But in some cases it is difficult to adjust the prices immediately. Prices of the product are mainly depending on the productivity of the company. It is a fact that cost of production will be less when there is mass production and it takes time to increase the production capacity. High production capacity in the segment can lead to price competition. Marketing manager is required to understand the relationship between price and contribution margin and price and demand relationship. In order to fix prices, prices need to compare with competitor’s products in the same category.

Developing price strategy is very important for any business and is focused is to attract the customers. Pricing of the product should be able to maintain long-term relationship with the customer and should provide long-term profit to the firm. “Pricing is a powerful marketing tool for impacting profitability. Just a one-percent increase in price can translate into a ten-percent or more increase in profits”.

External Factors:-External factors are uncontrollable factors. It is important to conduct appropriate marketing research activities to reduce the negative effect.

The important pricing objective of a firm is to get the return on investment and to maximize profit. Market share is depending mainly on the pricing decisions of the firm.

While making pricing decision by manger it is important to understand that the more competitive an industry, the more pressure there is on price and subsequently return on sales falls. “For marketers the important issue with elasticity of demand is to understand how it impacts company revenue”.

Price Setting

Price can set after examining the company and its marketing objectives. Initial prices needs to set along with standard price adjustments. It is also important to determine the promotional pricing and its payment options. Price setting involves a series of decisions such as price for direct and indirect customers. Price setting can be done only after making decisions on target market, product, distribution and promotional activities. Decisions involving all kinds of discounts and offers come under price setting decision.

Luggage club

The Luggage Club provides door-to-door luggage and goods delivery service. They are offering their customers for transporting their luggage or goods through the standard airline methods. Their services save customers from check-in lines of security and other time consuming delays associated with luggage and is of great relief to their customers.

The Luggage Club offers its international baggage and goods delivery service throughout the world. TLC itself can be considered as an innovative idea of the company which relieves tension regarding passenger’s luggage and saves lot of their valuable time.

“Instead of purchasing the traditional gift items that usually get lost or not used, purchase the gift that will make any traveler happy”.

Luggage Club adopted an innovative gift cards which is valid for one year. This is considered as one of their pricing alternative. Pricing alternative can be any thing which boosts sale of the product.


Pricing decision can be made according to the situation. The factors such as competition, legal implications, target etc must be considered while fixing the prices. Right pricing alone will not create success for the products in the competitive market. TLC offers innovative gift cards which is their decision comes under pricing. Manger is required to focus on effective pricing decisions which are essential for the long term profitability of the firm.

Find out your order's cost