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Category of the marketing mix

Price is a sole category of the marketing mix because it is the only constituent that symbolizes proceeds for the firm. The outstanding P’s (product, place, and promotion) are expensive activities undertaken to generate value for the customer. Price, in its ideal type, evokes this value. Pricing choices require a combination of economic and marketing codes, an approval of legal and ethical limitations, and the capability of applying accounting, financial, and market research statistics . Sunkist use direct price discrimination strategy for their price setting.

The company sells the product in retail stores, convenient stores, petrol stations and supermarket. The price of Sunkist in supermarket will be less then retail stores and convenient stores. However, the price of Sunkist in restaurant will be much more than other place. In addition, the Sunkist Company will use discount strategy in supermarket for customer who purchase more product. In penetration pricing, products or services are priced at a loss to increase market share. Lower prices are offered to obtain larger volume sales and applied to penetrate into a new market or to spot a commodity product.

The other lower pricing strategies include predator and expansionistic pricing. In case of the former, intentional price cutting prevents the other rivals from entering the market. It compels the rivals to compete on price and low profit margins. Free gifts and products are bundled which the opponents are unable to meet effectively. The first goal can be achieved if the above pricing strategies are followed. The first objective can be achieved if the above strategy is followed that is, the sales of Sunkist would be increased by ten percent by the end of 2011 .

In case of the expansionistic pricing, low prices are set to institute mass markets. Provisional price reductions are provided to augment sales or reduce cost version to increase recognition and switch to higher-cost adaptation after procurement. By the help of this strategy the market share can be amplified by 3 percent by the end of 2012. Higher pricing position strategy is applied so as to match purchaser’s amplified perception. Purchasers consider brands as status icons, in high demand with specific quantities. Premium prices are set for the products or services in high demands having short supplies.

The third objective, that is, 90 percent of the purchasers will anticipate this SBU having the strong value by the end of 2012 will be met. The second goal – to become market leader in carbonated drink of orange flavor through offering top quality products at affordable price can also be met by considering the above strategy . The budgets required for meeting the first objective needs to be high. It is because prices are required to be lowered in order to get hold of the customers. Thus, at the initial stage the profit margin will remain low.

Moreover, free gifts are offered to the customers that also incurs some amount of expenditure. Thus, the budget needs to be framed in such a manner so that the target is met. The time period taken for this would be a minimum of five years. In order to gain market share, prices are reduced at the initial stage, thus the prices that the competitors are charging would be more than what Sunkist would be charging. Initial loss or less profit need to be incurred so as to increases the sales of the company. The time frame required for this kind of strategy would be two to three years.

Advertising costs are incurred in order to promote the brand name in the market. Thus budget includes a portion of advertising expenditure. For creating a brand name in the market, lots of expenses are incurred to get hold of the market share. The time period required for applying and implementing this kind of strategy is between three to six years. Now, in the following section, four competitors of Sunkist, that is Fanta, Pepsi, home brand diet rite, and orange crush are chosen. For each competitor current promotion strategy, current price strategy, competitive advantage, market share and financial performance are shown.

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