Pricing Strategies and Distribution Methods
Different pricing strategies serve specific business goals. Cost-plus pricing covers production costs plus profit but ignores competitors. Skimming pricing starts high to establish premium image, whilst penetration pricing starts low to gain market share. Psychological pricing (like £1.99 instead of £2.00) tricks your brain into perceiving better value.
The best pricing strategy depends on several factors: your product's unique features, price elasticity of demand, competition levels, brand strength, and cost structure. Products with few substitutes can command higher prices, whilst those with many alternatives must price competitively.
Distribution gets products from manufacturers to consumers through various channels. Food typically follows four stages (manufacturer → wholesaler → retailer → consumer), whilst electronics often skip wholesalers. Holiday companies frequently sell directly to consumers, cutting out middlemen entirely.
Social trends are reshaping distribution - online channels help niche products reach wider audiences, and many consumers prefer accessing services rather than owning products (think Spotify instead of buying CDs).
Reality Check: Your purchasing decisions are constantly influenced by these pricing and distribution strategies - recognising them helps you become a smarter consumer.