Pricing is the manual or automatic process of applying prices to purchase and sales orders, based on factors. The needs of the consumer can be converted into demand only if the consumer has the willingness and capacity to buy the product. Pricing is very important in marketing.
Tiffany and Co. considers many things before attatching a price to a product, this includes:
Tiffany and Co. considers many things before attatching a price to a product, this includes:
- Competition. This is important particularly when selling similar products to Tiffany's competitors. Consumers like to know where they can get a better deal, quality etc. Competition is important to know about for many aspects of marketing and advertising. The price offered by the competition will have a significant influence on the price charged.
- Budget. In every pricing situation the customers’ budget is a major consideration. There is usually a range of different prices for different products so that products from the company can be an option for purchase to their target market.
- Knowledge. In the early stages of a product life cycle the consumer may not be aware of alternatives to your product or service and may allow the ability to charge a premium price. Premium pricing and high profits attract competition and competitors work hard to educate consumers on alternatives to the offerings.
- Market Positioning. It is important to know that the price can suggest value to the consumer. Priced too low a product can be viewed as poor quality and of limited value. High pricing can support the image of a high quality product for discerning customers if all of the other marketing components are aligned properly.
- Availability. An important consideration in pricing is the availability of the product or service and the ability to find substitutes. If there are markets that do not have easy access to products then a premium pricing strategy can be employed.