Price is an amount of money paid by the buyer to the seller in exchange for an item or things with the same value. It set business that offered the product to the public. In ancient times price is used to be determined by offering things with the same value. It is the part of marketing strategy that is used to increase the brand value of the product and the company. when a company going to set the price it considers lot of areas such as the cost of the product and promotions and revenues. (D, 2014)
HISTORY OF COLES:
G.J Coles was the founder of the Coles he, mainly started the store to support the poor Australian families. The first store was opened at Smith street, Collingwood, Victoria a century ago. From 1930 to 1940 Coles build their product quality, they had been in part of social service. Later in 1950 to till date they have been increasing the customer loyalty, innovation in the products and updating the technology. Today Coles has emerged as the Australia’s biggest outlets with thousands of branches. (Anon., n.d.)
FACTORS TO CONSIDER BEFORE PRICING:
Fixing of price to a product there are some rules to take into considerations they are price objective, how would be the demand for product in future, sustainability with competitors, product pricing strategy and the final price fixing and so on. Along with the discussed rules these are also should take into consideration like manufacturing and production cost, packing and labeling cost, product advertisements and so on.
Flexibility is needed in determining the product for instance, if a product with ten dollars from one brand and twelve dollars from well-known brand obviously, the customer choose the twelve dollar one for product quality and long lasting because the product is unique and there are very few substitutes in the market for the product.
ANALYSE COMPETITOR PRICING:
Interpreting the competitor pricing precisely is the vital part in the market for example, Coles have been reduced their prices on highly demand groceries like Kleenex, Sun rice and Colgate to earn good loyalty and market expansion then after immediately their competitors like Woolworth’s and Aldi has done the same. In this context Coles has applied the game theory in cutting prices of regularly used groceries.
In selecting Pricing strategy firm is the ultimate decider of the price for the product. By taking consumers and product sustainability into consideration firm decide the price of the product. Generally, company fix the price based on the total cost and their profit margin, if the product released in the market then firm should consider the competitors price and finally, Customer is the ultimate one to buy the product or not for the company fixed price. For example, Coles reduced the chicken price suddenly then their competitors reduced the price for winning the market share. (Low, 2016)
Consumer psychology is very interesting to talk because this happens in reality if we see one product in Woolworth’s which costs $6 then the same product in the Coles offered for $5.99 then customer think that this is for only five dollars because every time customer read the price from the left side to the right, this is also a pricing strategy. Other example like if a chocolate cost $3 then Coles offering 2 for $5.50 then customer think this for five dollars this is the place where firm gets advantage to win the market. This price is done according to the systematic biases in pricing.
Price discrimination is when the same identical product is sold out for the different costs from the same manufacturer or producer and this involves three degrees first degree is the seller knows what is the absolute value for the product and what the customer thinks to pay for it, second degree price depends upon the quantity and demand of product finally third degree price of price depends on the area, age and sex.
PRODUCT LIFE CYCLING PRICING
There are four stages of product life cycle they are
- Market development: initially sales were slow and demand of the product should be proved
- Market growth: Product demand gets accelerated this is also called as take off stage.
- Market maturity: constant demand and changes in the product could be done
- Market decline: The product loose its demand and poor sales
By taking this four stages into the consideration the prices of the product could be changed and at the high level of demand for the product then little changes should be done for the product sustainability. (Levitt, n.d.)
Anon., n.d. WWW.Coles.au.com. [Online]
[Accessed 04 09 2016].
D, L., 2014. Marketing Management. 4 ed. South western: s.n.
Levitt, T., n.d. Exploit the product life cycle.
Low, C., 2016. The Sydney morning herald, Sydney: Herald sun.
Vinay Kumar Gandagudem