Factors influencing the choice of pricing strategy

By understanding their customers, competitors and costs…

businesses can set prices to maximise revenue and profitability

Pricing can play a significant role in positioning the brand in the market…

and help a firm to compete effectively

Understanding the factors influencing the choice of pricing strategies can help a business make…

informed decisions about its pricing and increases its chances of success

Number of USPS/ Amount of differentiation

Products with many USPs and high differentiation can command higher price s

Technology

The use of online platforms and development of new markets has created new pricing strategies.

Level of competition

• In highly competitive markets businesses may need to set their prices low to reman competitive

• In less competitive markets, businesses may be able to set higher prices

Strength of the brand

A strong brand with a loyal customer base can command higher prices

Stage in the product life cycle

• In the introduction stage, prices may be set lower to attract customers and build market share

• In the growth stage, prices can increase as demand for the product increases

• In the maturity stage, prices may need to be lowered again

Costs and the need to make a profit

Prices must cover the cost of production and provide a reasonable profit margin