How a company prices its products and gets them to the customer is a crucial element of success in business. With the rise of e-commerce and other online retail channels, companies need to carefully consider their pricing and distribution strategies. In this article, we’ll explore some examples of distribution-based pricing and see how they work.
🔝 Top 10 Pricing and Distribution Strategy Examples
- Nike and Adidas Products: Price and Income Elasticity
- Volterman Smart Wallet: Strategic Marketing Plan
- Pricing Policies: Market Conditions and Costing
- Customer Service in Wholesale Distribution Analysis
- Food Prices Increase: Causes and Solutions
- Effects of Oil Prices Fluctuation on the Domestic Political Economies of Middle East
- Oil Prices Effects on the Aviation Industry
- Marketing Fundamentals to Magnolia Web Studio
- Dannon Company Inc.: International Marketing Mix
- Tesla: Marketing Distribution and Pricing
💸 Distribution Pricing Definition
Distribution pricing refers to the process of setting prices for products or services sold through distributors. Typically, this involves setting a designated percentage of discounts that are excluded from the retail price. This approach ensures that the distributor can profit from the sales while the business owner can expand their reach and increase revenue.
Why Is Pricing and Distribution Strategy Important?
Pricing and distribution strategy is important for businesses because it directly affects the success of their product in the market:
- A well-planned pricing strategy helps determine a product’s cost, which can influence consumer behavior.
- A distribution strategy determines how and where a product is sold, impacting its accessibility to consumers and sales volume.
The proper pricing and distribution strategy can help businesses increase their profits, gain a competitive edge, and build a strong brand reputation.
🤔 Pricing and Distribution Strategies: How to Determine
When determining pricing and distribution strategies, business owners should keep the following points in mind:
|✅ Determine the MSRP||Manufacturers should suggest a retail price to retailers that cover sales and manufacturing costs.|
|✅ Account for Hidden Costs||It’s vital to consider unforeseeable costs, such as transportation and storage, along with funds reserved for damage control.|
|✅ Divide the Margins||Every distribution actor is out to make a profit. That’s why it’s necessary to factor in the costs based on the type of product and the services offered by the distributors.|
👔 Pricing and Distribution Strategy: Examples of Types
A competitive pricing distribution strategy is a method that involves determining the prices of products or services in correlation to the costs of the competition. Distributors often set similar pricing to the one mentioned in the manufacturer’s price list. It’s one of the most common methods, sometimes called a “manufacturer-aligned pricing strategy”.
Cost-plus pricing has another name, “markup pricing”. It’s a business plan where a fixed amount or percentage is added on top of the existing distribution costs, determining the sale prices of products.
The economy pricing strategy sets the prices extremely low to make a minimal profit on each product. The idea is to sell as many units of products as possible. This kind of pricing strategy is often known as a “volume-based” strategy.
Small businesses or start-ups mostly use penetration pricing. They want to gain a considerable market share quickly, so they set low introductory prices to attract new customers. Established and large brands with good in-marketing techniques use this strategy when they want to launch new products in the market.
Value-based pricing strategy involves setting the prices based on the consumer’s perception of the product. It is also often called “customer’s willingness to pay” because this strategy revolves around the customer’s priorities and what they expect to pay. It makes it possible to determine the estimated sales channel easily.
Other companies with excellent pricing and distribution strategies include:
We hope our essay samples and guide helped you understand pricing and distribution strategy better! Feel free to share this article with your friends, and good luck with your business writing!