Wednesday, January 9, 2008
Price is the amount of money a buyer has to sacrifice in order to get what he/she wants.
Pampers' tends to make their products available to wide range of customers, so their price must also be affordable, reasonable and relatively low.
I've already mentioned that Pampers' makes constant improvements of the products, but also of the production process with new technology. That makes possible lowering of the price with no back step in the product's quality. P&G generally uses the strategy of price reductions on recognized brands, cost control throught the organization, and introduction of economy-priced products worldvide.
Pampers' often uses price promotion mix by giving coupons and temporary discounts to generate higher sales. Price promotion mix is generally used to reinforce the basic price mix which includes fixed prices and terms of payment, whereas price promotion mix represents additional reductions in order to tempt customer to buy.
For example, Pampers' coupons are given in some stores on the register when a customer buys competitors' products... This is a way in encouraging potential customers to join the crew and discouraging them in buying competitors products! Pampers' also uses non monetary promotions in order to avoid contractions in customers' quality perception and to enhance brand loyalty.
Pampers' must be careful with its pricing decisions because the demand for diapers is relatively elastic nowadays. That means that sudden change of prices can decrease the demand in the extent that higher profits wouldn't be able of covering that. The biggest cause of this sensitive situation is the presence of competition with similar, slightly differentiated products. Pampers' tends to give higher value to the customer in exchange of higher prices. Nonetheless, P&G, even dough a very successful company, had to lower the price of its brands...