Question

Can someone provide me a feedback on the discussion post below. This is a marketing management class. Thanks .

Introduction

The pricing strategy of a business is one of the most vital process in the formation of a marketing strategy of a business. There is a need for the businesses to be able to set the right price to remain profitable and to ensure the businesses sustainability through the market competitiveness. The process of determining the right price for the particular product or services, heavily involves the type of target market which the business targets to cater to, the product or services could belong to mass market, niche market or etc. most importantly is whether the product satisfies the customers’ needs and wants and are they willing to pay the price to acquire the product or services that is provided by the business. (De Toni, Sperandio Milan, Busata Saciloto & Larentis, 2017). For ABC Pizza, it is a business which belongs to the food and beverages industry. Their main product is Pizza and they have their own distinctive method of preparing the Pizza that they sell to their customers, which is niche in the food and beverages industry. ABC Pizza is located in multiple locations within U.S.

The Pricing Objective of ABC Pizza.

The product that is mainly served by ABC Pizza is their own crispy, airy and slightly chewy Pizza that is produced under 700 degree temperature to put together the satisfying taste of their Pizza with superior quality. Besides pizza, ABC pizza also serves pasta, salads, sandwiches and desserts. ABC pizza have been sought to be slightly pricier than their competitors as per analysis and testimonials given by their recurring customers, but however their customers still visit the place repetitively to have their custom made pizza’s which they prefer in their very own way of preparation by ABC pizza.

Thus, the pricing objective of ABC Pizza is Product Quality Leadership, the product which is produced by ABC Pizza is a product that is priced above the market rate of a meal. But however, though the price is higher than their competitors, ABC pizza pricing is not out of the customers reach. ABC pizza also focuses on the quality, the taste and the consistency of the product that they cater to their clients, their ingredients that is used to prepare the meals are purchased and maintained carefully. In addition to that, ABC Pizza is also the market leader in its area of operation for the type of Pizza which they cater to their clients. ("Pricing - Multimedia Marketing", n.d.)

Customers Sensitivity to ABC Pizza’s pricing.

Knowing the quality of the Pizza which is served by ABC Pizza, it could be said that the customers are moderately sensitive to price changes. Customers tend to accept the reason and explanation which is given by ABC Pizza’s team, this was observed when they had an incident where they had to increase the price of one of their product, which was a favorite dish for many customers that visited the restaurant. Another observation was, the customers that were sensitive, also opted to choose a different flavor of the food from ABC Pizza itself, due to the reason that it is much cheaper than their favorite option.

Customer Segment with Low Sensitivity to ABC Pizza’s pricing.

Looking at ABC Pizza’s customer segmentation, it is definitely a restaurant which is designed to serve their clients the quality that they paid for their meal. ABC Pizza has its very own share in the market and its market share consist of customers which are mostly from the high income category that are willing to pay the price to purchase the meal they desire, thus the sensitivity to price is low because it is superseded by the customers satisfaction through their value toward ABC Pizza’s products.

Challenges in Setting ABC Pizza’s pricing.

The price setting of the product that is sold by a business is affected by multiple factors. This factors not only relate to their operations, product and profitability. However it is also closely related to their competitors pricing as well and the substitute products which is catered by other businesses. (Samokish, 2018).To look through this matter, for the time being ABC Pizza is the best high quality pizza seller in the particular geographical area. However, that position could be in danger when bigger companies or better companies try to position themselves in the particular geographical location which ABC Pizza operates. Thus to not lose their very own market share, ABC Pizza’s strategy is to price their pizza’s at an affordable price, but slightly higher in price than their current competitors and as well of better quality than their competitors. Finally, they also rely on their previous business reputation and customer value towards their services to price their products, the past reputation is measured through their operations in other restaurant chain that was established previously in other locations.

Pricing method for ABC Pizza’s.

It was noticeable that the pricing method which was used by ABC Pizza is based perceived value pricing. Which is why the pizza which is sold in this restaurant is of higher price than the pizza which is sold by the competitors in this geographical area. ABC Pizza pricing method is closely linked to this strategy because, although the products are expensive than products of the competitor, the quality of the end product shows the real reason of why the price is comparatively higher. ABC Pizza’s is able to convince their customers that their products are better than their competitors and customers are mostly satisfied with that and their customers continue to visit them frequently.

Conclusion

The importance of pricing strategy was sought through this analysis, the pricing strategy is a vital process in determining the sustainability and profitability of a business. If the product is priced incorrectly, it could result in failure due to the negative signal given to customers and potential customers.

Answer 1

ABC Pizza is certainly taking the right approach in terms of pricing their pizza. The resons that they give is that their pizza is qualitatively better than other pizza in the market and making this believes to the customer and that’s the reason customers are regularly turning up their place.

The factor that any big corporation can jump in to the same place for same pizza business which might hamper ABC business interest cannot be denied but as long as they succeed in their commitment to better service and making customer realize the same they will continue to do better business.

The pricing is certainly a determining factor for business to decline or grow. In this case ABC has rightly kept the price for its target customer and according to better quality pizza it serves.