Pricing of Star Mobile Dissertation Example
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Free Pricing of Star Mobile Dissertation Example
Date: March 11, 2018
From: Lee Hammonds
The purpose of this memo is to address issues concerning the pricing of Star Mobile and its distribution channels. This memo will also give reasons for the recommendations made about the pricing strategy and distribution channels.
MM should consider either a value pricing strategy or a penetration pricing strategy. In penetration pricing strategy, a promotional period is introduced where the price of Star Mobile will be low. This is aimed at quickly gaining market share. This will lead to high sales volume during this period. This would in turn result to lower cost of producing each unit and high profits in the long run. MM could then decide to raise the price of Star Mobile after the promotion period is over. This is done when the company has achieved its market share objectives such as selling a set number of units (Rangwalla, 2009).
In value pricing strategy, the alternative, by charging fairly low prices for Star Mobile (a high-quality product) MM would gain customer loyalty. This would be possible since Star Mobile is a unique product with special features such as state of the art Windows 10 operating system. This pricing strategy does not depend on production costs incurred but rather customer perception of the product (Rangwalla, 2009).
Penetration pricing strategy would be the most suitable for MM. Since the company already evaluated its environment and gauged other similar products and their prices, the company can come up with a suitable price for both during and after the promotional period. Setting Star Mobile’s price below the market price of similar products will attract many customers, especially the young population. Through market research, a competitive product can be created (Editorial Board, 2014). Star Mobile is a competitive product with features that the young buyers crave. After selling a given number of units, MM could raise the price to the market price.