Pricing higher than the competitive price means that the business actively sells at a higher price than its competitors and uses product differentiation. However, if this method is not used carefully, it will encourage customers to use alternative products because they think the price is not commensurate with the product quality.
Competitive pricing, a business sets its selling price at or close to that of its competitors. Market leaders often take the lead in pricing while other businesses set prices close to the leader's. Competitive pricing tends to ensure that dumping does not occur and that interest rates do not fall, and that market prices are fairly stable. This method is commonly used in cases where costs are difficult to determine or competitive response is uncertain, and businesses find current pricing to be the best approach.
2.3.3. Final price selection
The above pricing methods are intended to narrow down the price range to choose from within which the final price for the product will be. Before deciding on the final price, the business needs to consider the following additional factors:
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Psychological factors in buyer pricing, most buyers consider price as a quality assessment indicator. In some special cases, higher prices make customers buy more. When pricing, sellers often use reference prices, and buyers when choosing a product often compare its price with other prices to refer to the price when deciding.
When determining the final price, it is necessary to take into account the influence of other variables of the marketing mix such as: business reputation, target brand, advertising, promotion.
The estimated price must be consistent with the business's pricing policy to ensure that the selling price is reasonable for customers while still ensuring profits for the business.
Reaction of stakeholders such as marketing intermediaries, competitors, government regulations….
2.3.4. Price adjustment
Businesses must not only establish a single price for their products, but must also develop a pricing structure that reflects geographic demand and costs. Furthermore, because market conditions are constantly changing, tactical pricing, which means timely price adjustments, is crucial to counter short-term changes in competitors' prices. Price adjustment methods
2.3.4.1.Pricing based on geographical principles.
Because customers are in different geographical areas, transportation costs are often different. Usually, when selling package tours that require picking up customers at home, travel businesses often specify a specific distance for picking up customers. If that distance is exceeded, the business will set a higher price to compensate for the increased cost of picking up customers at more distant locations.
2.3.4.2.Discounts and rebates
To encourage customers to buy and pay, businesses can change their base prices to reward customers who pay quickly, pay in cash, or make one-time payments, known as discounts and rebates.
*Bulk discount: This is a price reduction for buyers whose volume in one purchase or in a certain period of time is large. This type of discount is intended to encourage buyers to increase the quantity of each contract and to buy many times from one seller.
*Functional discount: This is the type of discount that the manufacturer applies to members in the distribution channel. This discount must include two parts: the cost that members in the distribution channel must pay to carry out product distribution activities according to their functions and a satisfactory profit for the efforts and risks of members in the channel.
* Seasonal discount: A price reduction for customers who purchase products or services out of season. This type of discount allows manufacturers to maintain stable production levels throughout the year.
* Cash and prompt payment incentives: This is a discount for customers who pay in cash and make prompt payments on their purchase invoices. The purpose is to encourage customers to pay immediately, reducing debt collection costs.
* Discount: is a form of price reduction compared to the prescribed price list. It is applied in cases of “selling old goods, buying new goods”; discounting to release slow-moving goods.
2.3.4.3. Promotional pricing
Promotional pricing is a form of temporary price adjustment to support sales promotion activities. There are some common forms of promotional pricing as follows:
Pricing to attract customers
Pricing for special sales
Installment price: essentially the seller's main form of financing to customers with low interest rates
Coupon sales: discounts for customers with coupons
Psychological discount: initially set high price then set low price
2.3.4.4. Discriminatory pricing
Businesses can adjust their base prices to accommodate differences in customer conditions, products, or other non-cost factors.
Some common forms of price discrimination
Customer-based pricing. For example, concert tickets are sold at low prices to students.
Pricing by location Pricing by image
Peak and off-peak pricing, prices here may vary by time of day or week
2.3. 5. Price changes
In many cases, due to changes in the business environment, businesses are forced to change their pricing strategies. There are two options for companies to choose from:
Proactively cut prices
Businesses must proactively cut their prices when faced with situations such as: excess production capacity, declining market share, and controlling the market by selling at low prices.
Proactive price increase
There are many situations where businesses need to proactively increase prices. Although they face risks due to price increases, if successful, it will bring businesses stability or increased profits. Situations leading to price increases: due to "cost inflation", due to demand increasing too much compared to supply
Responding to competitor price changes
To deal with price changes from competitors, businesses need to consider related issues in order to make appropriate price adjustments.
3. Other marketing policies support pricing policy
3.1. Product policy
Concept of product policy: product policy is the totality of rules governing the creation and launch of products into the market to satisfy market needs and customer tastes in each business period of the enterprise.
About the content of product policy
The product policy will determine the following issues: Determining the size of the product mix
Product Life Cycle Marketing Strategies New Product Development.
Product policy is the backbone of business strategy. If this policy is not correct, it means that the products and services that do not meet the needs and tastes of customers are introduced to the market. No matter how attractive other marketing policies are, they will be meaningless. Product policy not only ensures that production and business are in the right direction, but also closely links the stages of the enterprise's expanded production process to achieve the overall strategic goal.
Specifically as follows:
* Businesses that want to increase revenue or expand the market, dominate the market do not just trade in one product but mostly trade in many different products and services that are grouped into product categories. For businesses in the hotel and tourism business, due to the nature of the industry, a tourist when entering a hotel can use many different products. Providing different products and services to satisfy such different needs requires many different types and categories of products to form the product and service mix of the business.
So what is the product mix?
A product mix is the set of all product categories and specific products and services that a particular seller offers to buyers, while a product line is a group of products that are closely related to each other, perhaps because they are similar in function or because they satisfy the same level of needs, are used together, are sold to the same customer group, use the same type of intermediary or are sold in the same price range.
A company's product mix is reflected through the following four characteristic parameters:
Breadth of product mix: is the total number of product categories that a business offers to the market.
Depth: is the number of different products of the same type (or can be determined by the average number of products in each type)
The length or richness of a product mix is the sum of the products of all types in a firm's product portfolio.
The degree of product mix compatibility reflects the closeness and similarity between products of different categories in terms of end use, or being produced from the same production factors, or the same consumption channels or certain standards.
Decision on product assortment
Before deciding on product categories, businesses need to analyze the categories. Through analyzing the revenue and profit of each item in each category and the competitiveness of these products compared to competitors. Thereby, businesses make the right choices and decisions about product categories. Businesses often face two choices: deciding to extend the length of the category. The other is deciding to eliminate the product.
New product development: New product development is an activity to maintain the existence and development of the enterprise.
3.2 . Distribution policy
When bringing products to market, businesses must choose the most appropriate and effective distribution method. Distribution is the act of bringing consumers the products they need at the desired times, duration, quality, products, and types.
Product distribution policy is a system of measures and techniques to bring tourism products and services to the final customers with reasonable quantity, suitable items and ensuring the elements of service civilization.
Contents of distribution policy
• Objectives of distribution policy
Simply put, the goal of distribution policy is to ensure the consumption of many products and services with good quality, low cost, achieving high business efficiency, and at the same time, collecting more information about the market to better grasp customer needs.
According to Phillip.kotle, distribution channels must ensure 5 service criteria.
after:
+ Batch size: is the number of product units that the marketing channel allows a
Customers buy in batches. Batch size is inversely related to service assurance level.
+ Waiting time: The average time that a channel's customers have to wait to receive their goods. Customers generally prefer channels that deliver quickly and without errors.
+ Convenient location: Shows the level of marketing that creates convenient conditions for customers to easily buy products. For the hotel and tourism business, convenient location plays a very important role, customers can easily see the product and can use direct distribution channels.
+ Product variety: shows the breadth of product categories that the channel guarantees.
tell.
+ Support services: are additional services that the channel performs supporting services.
The more the channel does, the more work it does.
● Basis for building distribution policy
When building a distribution policy for hotel and tourism products, it is necessary to base on:
Customer characteristics: number, geographical dispersion, buying patterns, sensitivities and different buying methods.
Based on product characteristics: products of the hotel and travel industry are mostly service products, so the characteristics of the service will also greatly affect the construction of distribution channels.
Based on the type of intermediary readiness, the strengths and weaknesses of this type.
Based on competitive characteristics: in today's competitive environment, it is necessary to design to ensure the highest level of service at the lowest cost in establishing channels for the target market.
Business characteristics: financial strength, past service portfolio, channels and current marketing policies of the business
Environmental characteristics: economic conditions, legal regulations and environmental constraints
● Building distribution channels
Travel businesses need to choose intermediaries that are suitable for the products they trade. During the business process, travel businesses need to evaluate channel options based on the following criteria: economic control and adaptation.
● Channel management: Travel businesses need to manage distribution channels effectively to reduce the impact on the distribution process of tourism products.
3.3. Promotion policy
When setting out product policies, travel businesses also choose how to bring that product to market in the most effective way.
Tourism promotion is a propaganda and promotional activity aimed at finding and promoting opportunities for tourism development (Vietnam Tourism Law).
Mixed promotion is a combination of advertising, product promotion, sales techniques, sales methods, and creating social relationships applied by businesses for a business stage.
Which tools to use to combine together in the promotion mix depends on the businesses, it is based on the following characteristics:
-Target market segments, characteristics of each target market segment that the business aims at
- Type of products and services that the business is providing.