All businesses use four main marketing tools to influence consumers decisions on buying. They are Product (the range of products being offered), Price (methods on pricing), Place (the opportunity of any one of the companies retail store in the UK) and Promotion (advertising and builing the image of the company). To achieve this the company; Sell at the right PRICE Offer the right PRODUCT At the right PLACEUsing the best way of PROMOTION Price- NEXT would look at prices of the same items that are being sold in other competitor’s stores and compare it to their own prices. This is to see whether they would be charging too much for a certain product. This is important because if a customer decides to compare prices, the customer would obviously go for the company that sells the specific good at the lowest price.
In terms of price many costs have to be taken into account such as the fixed costs and variable costs. Also the compant have to look at the price of importing and the cost of advertising the name of the company, to boost its customer base around the UK. Pricing has a range of factors such as competition and special offers. 1. Competition – This is a type of pricing where all businesses follow each other businesses movements. Most of the time NEXT prices are lowered so the rivals are caught unaware and surprised by the actions. This hands a big boost to NEXT as when this happens it widens out the customer base and can attract more customers who usually tend to shop at another store such as Marks ; Spencers.
2. Special offers – This is basically a mark down on prices for a sale that probably occurs every time the season changes (Summer to Winter). For example NEXT lower all their prices on Boxing Day by offering discounts upto 80%. NEXT also open at 5am, this is done so rivals cannot compete with them early in the morning but frustratingly all companies are following the trend by opening early to deliver a ‘sucka punch’ to its rivals. NEXT is renowned for its quality of goods so consumers believe high quality goods are available at a lower price. There are also pricing strategies to be looked at; 1. Premium pricing – Uses a high price, but gives a good product/service exchange e.g. The Ritz Hotel or Harrods 2. Penetration pricing – offers low price to gain market share – then increases price e.g. France Telecom – to attract new corporate clients
3. Economy pricing – placed at ‘no frills’, low price e.g. Soups, spaghetti, beans – ‘economy’ brands 4. Price skimming – where prices are high – usually during introduction e.g. new albums or films on release 5. Psychological pricing – to get a customer to respond on an emotional, rather than rational basis e.g. 99p not 1.01 ‘price point perspective 6. Product line pricing – rationale of a product range e.g. MARS 32p, Four-pack 99p, Bite-size 1.29
7. Captive product pricing – products that complement others e.g. Gillette razors (low price) and blades (high price) 8. Product bundle pricing – sellers combine several products at the same price e.g. software, books, CDs. 9. Promotional pricing – BOGOF e.g. toothpaste, soups, etc 10. Geographical pricing – different prices for customers in different parts of the world e.g. Include shipping costs, or place on Product Life Cycle.