Product Pricing Essay -- essays research papers

Product PricingThe cost of an familiar low price con $19.95. The cost of a Rolex watch $2,465. A great paper explaining wherefore corporations put these prices on ingatherings priceless. Wal-Mart has become the attracter in everyday low price set, and the number one retailer has brought many businesses to their demise because of their pricing strategy. Recently, Wal-Mart has expanded their gross sales niche to the swindle department putting many curio toy stores near or completely out of business. This paper will discuss how Wal-Mart priced their line of toys, why Wal-Mart use toys as loss leaders to attract customers, and two put together methods of pricing food marketers can use based on demand and reputation. gip PricingPricing is an important aspect of every business. Chief financial Officers (CFO) use pricing to create financial projections, appoint a break-even point, and calculate profit and loss margins (Power Point, 2005). It is the only element in the marketi ng mix that produces revenue. Price is also one of the most limber elements of the marketing mix as it can be changed very quickly. This is unremarkably done to beat competitor prices in an attempt to fix the products market value position very low (Anderson & Bailey, 1998). afterwards all, high prices make it difficult to become the market share leader. The spark advance US retailer, Wal-Mart, is an expert at low product pricing as evident in 2004 with $250 billion dollars in sales to their 138 million hebdomadary shoppers. However, they are also responsible for reducing prices so low that it drives specialty stores out of business. This is the effect Wal-mart has had on many toy stores and has almost unappealing the doors of the famous toy store Toys R Us Inc.Wal-Mart set extremely low prices on toys in a very successful pricing strategy to attract customers and become the leader in toy sales (Grant, 2004). This pricing strategy is called market penetration pricing. Penetrat ion pricing is used to enter the market quickly and win a large market share (Anderson & Bailey, 1998). These low prices have taken their toll on toy stores. Toys R Us is now the second largest toy seller in the U.S. behind Wal-Mart. Toys R Us was recently bought for $6.6 million by investors who wish to transform the store into a more viable store for the built-in family (DInnocenzio, 2005). Other toy stores are not as fortunate. FAO In... ...2004, October 12). Wal-Mart wants $10 cds. roster Stone. Retrieved on May 2, 2005 from http//www.rollingstone.com/news/story/_/id/6558540/thekillers?pageid=rs. Home&pageregion=single1&rnd=1097616001120&has-player=unknown DInnocenzio, A. (2005, March 18). Toys R Us deal may reignite the industry. The San Diego federation Tribune. Retrieved on April 25, 2005 from http//www.signonsandiego. com/uniontrib/20050318/news_1b18toys.htmlGrant, L. (2004, October 11). Wal-Mart doesnt plan to toy much with prices last socio-economic classs cuts hurt other retailers and left giant thinking it emasculated too much. Proquest Document. USA Today. Pg B8.Johnson, L. (1999). A review and a conceptual exemplar of prestige-seeking consumer behavior. Academy of Marketing Science Review. Retrieved on May 4, 2005 from http//www.findarticles.com/p/articles/mi_qa3896/is_199901/ai_n8843016 release leader. Retrieved on May 3, 2005 from http//www.absoluteastronomy.com/ encyclopedia/l/lo/loss_leader.htmPower Point introduction (2005, May 1). Touro University International. Marketing 501 CD.Price skimming. (2005). Invetopedia.com. Retrieved on May4, 2005 from http//www.investopedia.com/terms/p/priceskimming.asp