QUELREN A.

MCGOWAN

BSBA 501

PRICING STRATEGY ASSIGNMENT #2

1. Critic the given case.

The strategy of Nokia is excellent from the planning to the pricing. Nokia innovated different types
of phones that the customers need. They gathered information of what are the types of phones that the
people would buy. Aside from the expensive phone or we can say the limited edition phone that rich
people would actually want and buy, they also presented phones that are really helpful like the common
phones that are used to download applications, listen to music, play videos and others, and also, the
type of phone that has full keyboard. Because of these options, the people can choose from different
varieties depending on their needs.

Aside from this, Nokia set their price lower than their competitors but still manage to gain good
profits because they are able to manage their resources well. Due to this, people can now switch to their
products because theirs are more affordable.

To summarize, Nokia planned for their products very well and researched the communication needs
and priorities of the consumers and businesspeople, that’s why their products are bought by many.

2. Discuss the stages for establishing prices.

a. Development of Pricing Objectives

This is the first stage for establishing prices. A company or business need to develop their objectives
first. They should decide where it wants to position its market offering. It will be easier to set the price if
the objectives are clear.

b. Assessment of Target Market’s Evaluation of Price

In the second stage for establishing prices, the business should do assessments of evaluation of price for
their target market which means they need to research for their target market to set their price. Each
price will lead to a different level of demand and have a different impact on a company’s marketing
objectives. The normally inverse relationship between price and demand is captured in a demand curve.
The higher the price, the lower the demand. Most companies attempt to measure their demand curves
using several different methods like surveys, price experiments, and statistical analysis.

A firm should estimate a new product’s desired functions & determines the price that it could be sold at.
From this price the desired profit margin is calculated. Now the firm knows how much it can spend on
production whether it be engineering, design, or sales but the costs now have a target range. The goal is
to get the costs into the target range.
 c. Evaluation of Competitor’s Prices

This is the third stage for establishing prices and here, considering the prices from your competitors is
very important. Basically, the firm should benchmark its price against competitors, learn about the
quality of competitors offering, & learn about competitor’s costs. This will help your business a lot in
setting your price.

d. Selection of a Basis for Pricing

An organization has various options for selecting a pricing method. Prices are based on three dimensions
that are cost, demand, and competition and this is the fourth stage for establishing prices. The
organization can use any of the dimensions or combination of dimensions to set the price of a product.

e. Selection of a Pricing Strategy

As for the fifth stage, it involves the selection of a technique for setting the price. There are various
types of pricing methods used by organizations. Let us always remember that an effective strategy is
very important in a business because the effectiveness of your strategy could be the key factor for your
business to be successful.

f. Determination of a Specific Price

Pricing methods narrow the range from which the company must select its final price. In selecting that
price, the company must consider additional factors like the impact of other marketing activities,
company pricing policies, gain-and-rick-sharing pricing, and the impact of price to the other parties.