Effective Marketing Strategies and Pricing Models

Promotion: The Key to Increased Sales

The final and crucial factor that helps to increase sales and marketing effectiveness is promotion. Promotion is the method of communication by which the marketer provides information about the product. It includes advertisements, personal selling, word-of-mouth publicity, etc. For example, the Apple iPhone is promoted on TV, social media, etc.

E-commerce Pricing Strategies

Many online retail businesses use one of three popular strategies to set product prices: cost-based, competitor-based, and value-based.

Cost-Based Pricing

Cost-based pricing, or as it is sometimes called, cost-plus pricing, may be the most popular pricing model in the retail industry. Its greatest advantage is simplicity. It permits a store, be it brick-and-mortar or online, to set prices without significant customer or market research and ensure a minimum return on each product sold.

Competitor-Based Pricing

With a competitor-based pricing strategy, you simply monitor what your direct competitors are charging for a particular product and set your price relative to theirs. This retail pricing model works when you sell identical products as your competitors and have no differentiators. In effect, you're assuming that your competition has done some research or has some experience or is at least visible enough in the marketplace that their pricing must be matched.

Psychological Pricing

Ending a price in .99 is based on the theory that, because we read from left to right, the first digit of the price resonates with us the most, Hibbett explained. That's why shoppers are more likely to buy a product for $4.99 than an identical one for $5 - the item that starts with a 4 just seems like a better deal than the one that starts with 5.

Psychological Concepts in Marketing

Psychological concepts like promoting a product exclusively, repositioning oneself for competition, etc., can influence marketing under personal selling categories. For example, in the aircraft manufacturing industry, if the seller properly explains how the products are different from other suppliers and what genuine flaws can be there within a specific price range, they would be able to build trust and sell the product.

Also, in the case of mass selling, by rightly promoting the product according to people's choices and demands, one can make a mass sell of products if the proper promotion channel is used and the emotional attachment or success of the product over many years is emphasized.