There are various legitimate sales strategies that involve the use of competitive price-lowering practices, for example, penetration pricing in which a company temporarily lowers its prices by a small percentage in order to capture a larger market share and penetrate more deeply into the market. If pricing is set lower by a business for reasons other than to eliminate competitors, then pricing is not considered predatory. However, it’s hard to prove monopolization behind predatory pricing, as companies can insist that their pricing was lowered for other reasons. American antitrust lawsexist to preserve competition in the market and minimize monopoly power, and according to those laws, most forms of predatory pricing are illegal.Ī pricing strategy is considered predatory if its goal is to price competitors out of the market. Predatory pricing is a monopolistic practice, and there is a l ong history of legislationagainst monopolistic behavior in the United States, with predatory pricing coming under that banner. Patent protection/ease of copying - A patent is a right, granted by the United States to an inventor, to exclude others from making, using, selling or importing an invention throughout the United States without the inventor's consent.Is predatory pricing illegal in the U.S.? Your marketing plan and budget keeps your entire team focused on specific goals - it's a critical resource for your entire company. Marketing budget - A marketing plan is a detailed roadmap that outlines your marketing strategies, tactics, costs and projected results over a period of time. To a certain extent manufacturing capacity also decides the nature and purpose of a business unit. Capacity has technological, structural, economic and strategic connotations. At the same time insufficient manufacturing capacity can result in turning down orders which could lead to customer dissatisfaction. Product positioning - A marketing technique intended to present products in the best possible light to different target audiences Manufacturing capacity - Increase in manufacturing capacity brings with it greater costs, greater complications, and need for better management. Status quo is defined as the way things are, as opposed to the way they could be. These companies are so focused on selling their products to their customers that they pay little attention to other areas of marketing, such as market research or surveying their customers to measure their level of satisfaction Status-quo pricing - Status quo pricing strategy copies the price levels of its competitors or maintains the current price levels of similar products or services in the market. Companies that focus one hundred percent of their marketing efforts on selling their products use a sales-oriented marketing strategy. Sales-oriented - This philosophy is based on the idea that increasing sales will provide a better financial position than increasing profits. You determine your cost for manufacturing each product, then add a percentage for profit. Profit-oriented - A profit-oriented pricing strategy involves setting prices for your products that will guarantee you'll make money on each sale. ~ disadvantage is that large profits attract competitors, so this price strategy only works well for businesses that have a significant competitive advantage, such as proprietary technology. ~ Finally, late adopters might be pleased to get your prestigious product at a bargain price, which creates goodwill for your company. If the initial price is too high, you can lower it easily. It can create an aura of prestige around your product. ~ If consumer demand forecast is off, company can end up with a large stockpile of unwanted products Skimming ~ focuses on maximizing profits by charging a high price for early adopters of a new product, then gradually lowering the price to attract thriftier consumers ~ It can offer insight into what consumers are willing to pay. If your business is planning to launch a new product, penetration pricing and price skimming are two marketing strategies you should consider Penetration Pricing ~ occurs when a company launches a low-priced product with the goal of securing market share ~ Expensive so might not work for small companies ~ To properly execute a penetration-pricing strategy, the sponge manufacturer first must gear up for mass production and then launch a sizable advertising campaign to publicize its new low-priced sponge.
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