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Business Evaluation - Strategic Marketing Plans

Essay by   •  July 14, 2012  •  Research Paper  •  1,200 Words (5 Pages)  •  1,819 Views

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Strategic Marketing Plan is a plan outlining marketing opportunities for a business. Strategic Marketing Plans help a business to better understand the business as a whole and to better understand their customers. In this paper Team B use the Business Plan Pro to help the team to hypothetically create at an e-commerce business. After brainstorming Team B e-commerce businesses are Top B clothing line and Top B cooking ware that the team was able to process a strategic marketing plan to get the business up and running. In this paper Team B shows the various pricing strategies appropriate for your business and assess pros and cons of each strategy. Finally Team B will select one pricing strategy for Top B clothing line and Top B cooking ware.

Retail Pricing Strategies

Choosing the appropriate price for various products is one of the many tough decisions a start-up business has to make. According to Gregson (2008), some of the ways to determine if pricing is successful is if the company has a profit, owner is paid a reasonable wage, company, and owner can pay their taxes and the company has no problems paying their bills. There are three strategies appropriate for retailers markup, follow-the-leader pricing, and below-market pricing (Zimmerer, Scarborough, & Wilson, 2008).

An easy straightforward strategy is to sell a product or service for more than what it costs. A product should never be sold below the cost even if sold in massive quantities. For this reason a company must determine an appropriate markup, which is either in the form of a dollar amount or as a percentage. Markup is the difference between the selling price and any related costs (Zimmerer et al., 2008). When calculating the costs, the company should include variable costs, fixed costs, expected quantities, and total revenue into this portion of a pricing analysis (Paulson, 2000).

Retailers may also use the follow-the-leader pricing. Many small businesses check to see what the competitions prices and rates are and try to follow suit. This strategy is easy to follow. Companies can simply check out their competitions advertisements or stores and see what their prices are. Another pricing strategy appropriate for retailers is below-market pricing. Companies accomplish this by choosing to create a discount image in the market by offering products or services at below-market prices (Zimmerer et al., 2008). Retailers can do this by removing most of the extra features or services that their competitors are offering. Companies use this strategy to obtain a large amount of sales that will help to offset the smaller profit margins.

Pros and Cons of Strategies

The best aspect of the retail markup is that it is the safest and most familiar method of pricing. One simply orders a specified amount of a product at a price and divides the cost of the order after adding the day-to-day costs such as wages, utility cost, and floor space by the amount of items ordered and adds a certain percentage. Usually 40 % is used but that is not always the case. The downside to the markup method is that sometimes price cuts need to be done to clear out merchandise in a retail setting to make way for new merchandise. This is sometimes done because the initial item does not sell well, or perhaps there is a new and unexpected trend coming in. If one does not make way for the in demand items then the competition certainly will get a leg up.

Follow the leader pricing is risky, as following the



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