Cumberland Metal Industry
Cumberland Metal Industry
1,2- The first two questions will be gone through together in order to avoid confusion. Pricing is one of the most important elements to launch a product on the market. Mainly, because it is the only element, together with the marketing mix, that produces revenues. It is fundamental to set the right strategy in deciding and setting the price of a certain product to be sure that is fully understood and appreciated by customers in all its aspects and characteristics. A suggestion to rightly start the pricing strategy would be to follow a value based strategy, in order to understand what mostly consumers want and what price they would like to spend for that type of quality. It is the reverse process of the cost-based strategy, so it is customer-driven. It is aimed to use buyers’ perceptions of value rather than sellers’ costs, to set price. First the company needs to assess customers needs and value perceptions, then set target price to match customers’ perceived value, afterwards determine the costs that the company itself can incur into, and design the product in the end. Afterwards, this company should choose a market skimming strategy, in order to set a high price for a new product to skim maximum revenues layer by layer from segments willing to pay high prices. This is linked to a price to price strategy, but what the company can do more is also set a price promotion, like a discount in the beginning, because of the starting difficult situation in which the company has to convince customers that their product is much more reliable and more performing than the cheaper one made of asbestos. Thus, CMI also needs to adopt several marketing-mix programs such as advertising and roles of influencers to spread and fix the perceived value in customers’ minds. The estimation of the CMI product’s price starts from taking into consideration only the 11 ½ pads because the company decided to focus on this segment at the beginning. So, the normal
1,2- The first two questions will be gone through together in order to avoid confusion. Pricing is one of the most important elements to launch a product on the market. Mainly, because it is the only element, together with the marketing mix, that produces revenues. It is fundamental to set the right strategy in deciding and setting the price of a certain product to be sure that is fully understood and appreciated by customers in all its aspects and characteristics. A suggestion to rightly start the pricing strategy would be to follow a value based strategy, in order to understand what mostly consumers want and what price they would like to spend for that type of quality. It is the reverse process of the cost-based strategy, so it is customer-driven. It is aimed to use buyers’ perceptions of value rather than sellers’ costs, to set price. First the company needs to assess customers needs and value perceptions, then set target price to match customers’ perceived value, afterwards determine the costs that the company itself can incur into, and design the product in the end. Afterwards, this company should choose a market skimming strategy, in order to set a high price for a new product to skim maximum revenues layer by layer from segments willing to pay high prices. This is linked to a price to price strategy, but what the company can do more is also set a price promotion, like a discount in the beginning, because of the starting difficult situation in which the company has to convince customers that their product is much more reliable and more performing than the cheaper one made of asbestos. Thus, CMI also needs to adopt several marketing-mix programs such as advertising and roles of influencers to spread and fix the perceived value in customers’ minds. The estimation of the CMI product’s price starts from taking into consideration only the 11 ½ pads because the company decided to focus on this segment at the beginning. So, the normal