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Pricing is the process of determining the proceeds a firm expects from the sale of its products. This is a very important aspect of the organization as it is the only area which dictates the profit maximization. It then follows that pricing strategy is the main tool which can easily destroy or uphold the demand of the product in the marketing strategy.
The pricing strategy used to market the bio cell is the skimming pricing strategy. In this strategy the organization is meant to start the pricing of the cell at high initial price then it goes by reducing the prices as it faces stiff competition in the entire market with time. The main reasons as to why the firm may opt to employ this pricing strategy are as listed below: firstly when the nature of the demand curve is uncertain it may be highly recommended. The organization will be forced to use the strategy as it is not aware of the expected market trends as far as the market of cells is concerned. Again this strategy may also be used due to the fact that the firm has expended large sums of money and resources in the research and development of the product as it is one of the kind in the making of dry cells (Joshi, Rakesh, 2005).
The extensive research required in the development of bio cell will have to prompt the organization to introduce the product in the market at a high initial price to recover the high cost of production hence the skimming pricing strategy will be of great importance. Moreover, it is very true that the product is so innovative that its market will be expected to mature slowly hence this strategy may be put into place. In real sense, for a very similar product to be brought in the market it has to take a considerable length of time hence application of this strategy is material. Lastly, the other consideration which may be put into place is the fact that competition is likely to develop and market a similar product in the future. Due to this aspect the firm may decide to employ this pricing strategy so as it may enjoy the short lived benefits before it lowers the entire prices (Miles, 2003).
There are a number of pricing tactics employed to achieve the organizational goals which are discussed as below: firstly, is the product line pricing where the firm gives different price points for the products in the product line of cells. This tactic will be of use due to the fact that different cells will attract different market demand levels as bio cell will be of high preference as compared to any other kind of cells which the firm may be offering. Secondly, the competitive pricing tactic will dictate price the bio cell will go for in consideration of the prices chief competitors offers in the market. The price here must be in a position to withstand the competition faced in the market for the product to survive the market (Miles, 2003).
Again, another consideration is the value pricing tactic. In this tactic, the value of bio cell will dictate the price it attracts in the market. Now that it is very valuable in its making as it is less pollutant to the environment, its simplicity amongst other factors makes it to attract a very high value. Lastly, there is the differential pricing tactic. Basically, in this tactic bio cell is meant to seem different completely from other close substitutes especially in the color, packaging amongst other factors hence attract better price (Joshi, Rakesh, 2005).
There are a number of legal and ethical issues related to the pricing tactics. Some ethical issues includes: firstly is the social equity. This may either take the form of fixed or sliding scale fees. This in real sense puts into place discrimination between the poor and the rich.
Secondly, there is the potential exploitation. Due to the fact that bio cell is considered sophisticated as it bares very unique features that it will attract better prices than the other related products in the market. On the other hand some legal issues also stands in the entire pricing tactics of bio cell. It is very clear that in the introductory stages of the product some taxes must be channeled in the side of the government. This is meant to hick the entire market prices as this amounts the cost of production (Miles, 2003).
The channel of distribution of bio cell from the firm will involve firm, wholesaler, distributor, retailer then the finalist who are the consumers. Firstly the wholesaler acquires the bio cell packaged in bulk. It is his responsibility to ensure that he breaks the bulk on behalf of the firm. It will also amount a collective responsibility of the organization and the wholesaler to facilitate product promotion. This ensures that all the perspective buyers are informed about the existence of bio cell, its' given uses, the various outlets it can be acquired from and also the distinct features which it bears. The wholesalers should also gather adequate market information of the product from the relevant sources which includes: the consumers, retailers and also the distributors. The wholesaler again is expected to advance credit facilities to the retailers for the product (Miles, 2003).
The distributor then links the firm and the wholesaler and also the retailer. It is a key role of the distributor to ensure that the product arrives to the destinations which is the retailer and wholesalers terminus on timely basis. He should ensure that there is continuous and steady supply of the product as required. The retailer in his position should be the one to complete the distribution channel by selling the product to the consumers. He/she is able to sell the product in quantities which the consumer is willing and able buy. The retailer again is the person who will offer advisory services on the usage of the product, the general uses and new uses once they emerge. Also he/she will offer the product on credit to the perspective buyers. The retailer will be also a very resourceful person to the firm as he acquires first hand information from the market about the feelings of the consumers about the product. This happens because of the direct interaction with the actual consumers of the product (Joshi, Rakesh, 2005).
The distribution strategy very well fits the product, target market and also the overall marketing objectives for the company. In reference to the product it is very suitable due to the fact that it is not perishable at all so the long channel of distribution may not affect the quality of the product in any sense. Moreover, the market strategy is suitable in reaching the target market adequately. Firstly, there are the middle income earners, a very great market target. This target is widely spread over large geographical area hence the distribution strategy in application may be of a very great significance to the entire market (Miles, 2003). Secondly, are the middle aged people. This target is meant for trying things hence will be of high preference as far as bio cell is concerned. The marketing strategy will be of importance in the sense that these people will be reached adequately due to the long channel of distribution which covers a very wide geographical area (Miles, 2003).
Lastly, this distribution strategy also goes hand in hand with the overall marketing objectives of the organization. These objectives entails, enjoying high sales volume, which in turn leads to the profit maximization objective of the organization. Another objective is enjoying a longer life span of the product in the market due to the intensive product promotion. Lastly, is enjoying the greatest market share, which in turn leads to high sales volume. All these objectives are attained with a lot of ease due to the fact that there is a long channel of distribution which helps the firm in execution of the tasks and various roles (Joshi, Rakesh, 2005).
In conclusion, the above is a clear outline of the pricing strategy applied in the pricing of the bio cell firm's product. It also lists some of the tactics the organization puts in place to market the product. It then detail some of the legal and ethical issues in the pricing tactics of the product and also the distribution channel which the product follows to reach the target market. Finally, it also explains how distribution strategy fits in the product, target market and company objectives at greater extent.