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Numerous factors influence the five pricing strategies: premium, penetration, economy, psychological, and promotional. Four critical criteria may in


Numerous factors influence the five pricing strategies: premium, penetration, economy, psychological, and promotional. Four critical criteria may in

  

Numerous factors influence the five pricing strategies: premium, penetration, economy, psychological, and promotional.

Four critical criteria may influence the premium strategy’s selection. To begin, if the business wishes to imply superior quality. The resulting consumer perception might assist in elevating or maintaining the value of a premium brand. Second, if the corporation wishes to advertise to exclusive groups or images of high-net-worth individuals. Thirdly, if the corporation wishes to fast recoup its investment in the product demonstrated at marketing assignment help. Fourth, the corporation offers numerous variations on a single product. This fourth aspect contributes to the strategy’s classification as a product-line pricing strategy (Hughes & Kapoor, 2010, p. 466).

For new items, penetration pricing is used. As a result, the primary element affecting pricing is the new product status. Unlike premium pricing, which is heavily impacted by product line and involves charging a premium to imply high-quality/luxury, penetration pricing entails charging a cheap price to quickly gain market dominance.

The primary reason driving the decision to use economy pricing is the desire to sell at the lowest possible price that yet generates a profit for the business. Due to the product’s low price, the corporation can market it to the public. Due to the low prices, the technique is comparable to penetration pricing, however unlike penetration pricing, another component is taken into account, namely setting the price beyond the break-even price. Whereas premium pricing is utilized when a business wishes to sell to high-income groups, economy pricing is used to maximize profits.

Under psychological pricing, the primary criteria determining strategy selection are the company’s desire to elicit emotional responses from consumers rather than economically reasonable answers; and if the offers are consumer products (Hughes & Kapoor, 2010, p. 466). While premium pricing is ideal for both business and consumer items, psychological pricing strategies such as placing the price at $4.99 rather than $5 may not elicit the same emotional responses in business products as they do in consumer products.

While a luxury brand may place a premium on the product in its 4Ps marketing mix, an everyday brand that prides itself on low-cost products may place a premium on pricing. The latter company is more more likely to use a promotional pricing strategy in order to highlight its price competitiveness. Additionally, a corporation may utilize promotional pricing to debut a new product, combining penetration pricing, which involves setting a low price, with promotional pricing, which involves adopting unusual pricing and discounts.

Although Disney’s pricing strategy is complicated, the firm is primarily focused on premium pricing. According to Baisya (2013), Disney is a luxury brand that charges much more than competitors’ comparable products. Market attitudes indicate that the corporation is on the verge of pricing out the middle class and has lately implemented a dynamic pricing strategy to accommodate for seasonal variations (Cameron, 2019). In some instances, the corporation blends its premium marketing strategy with other techniques as deemed appropriate. For example, in order to balance demand throughout the year, Disney charges higher rates during peak demand months and lower promotional pricing during low demand periods. Another example of the company’s pricing strategy is the debut of Disney Plus, the company’s streaming service comparable to Netflix. For the launch, the corporation used a penetration pricing approach. Disney priced the service at $7 per month, compared to Netflix’s $13. Many were taken aback by the penetration pricing, with others questioning whether the price was “too low for the premium brand” (Hollis, 2019). The corporation also employs psychological pricing, indicating a monthly subscription charge of $6.99 for Disney Plus. Despite the complexity of the pricing structure, Disney’s approach is primarily one of premium pricing, given the company’s premium brand.

Disney has strategically positioned itself as a luxury brand, allowing it to demand premium rates for its products. Occasionally, the corporation will increase its prices. As said previously, there are worries about whether the corporation is pricing itself out of reach of the middle class. Despite these feelings, the company’s market share continues to expand and the brand continues to thrive. As a result, the premium pricing approach is effective because the company has developed a premium brand that is backed by high-quality products and a strong marketing strategy. As Santos (2012) notes, Disney exemplifies the concept of pricing power. Due to the company’s brand value, it is able to charge premium prices while still retaining customers. Disney is cognizant of brand value and its implications for price in this regard. By retaining a strong brand value, the corporation is able to pursue a premium pricing approach.

Additionally, the strategy of premium pricing benefits from the focus on an exclusive market niche. The company is unmatched in terms of its ability to impact its market segment. This factor provides Disney with considerable leverage in order to charge premium pricing. For example, Disney theme parks not only give a world of imagination and entertainment to a specific market, but also persuade visitors to return. Disney’s cultivated strong relationship with consumers provides it with greater leverage to charge premium pricing. Get any case study help here.

Disney’s pricing approach is largely consistent with the language in promotions. In its “huge marketing push” to introduce the new streaming service, Disney Plus, the firm emphasized the low pricing (Sutton, 2019). This penetration pricing model has enabled the business to rapidly grow in terms of subscriptions. In keeping with the premium price strategy, the corporation promotes the brand’s value and product excellence in promotional material. Consider the messaging of company-sponsored theme park promotions. One advertisement stated, “That is the power of magic – you can fly.” Another illustration is seen in Disney’s phrases, which are regularly featured in marketing campaigns. “The happiest place on earth” is one such tagline. This tagline speaks to the value that consumers receive from the Disney brand.

A prominent aspect of Disney’s messaging in its marketing is the company’s proclivity for insinuating the Disney brand’s high brand value. This may be a precautionary action taken by the corporation to nurture and protect its brand value even as it pursues low-price pricing techniques. Despite stressing the low price, which was determined by a penetration pricing strategy, the highly promoted Disney Plus also underlined the product’s worth. The image below is an example of a marketing promoting Disney Plus during its initial debut, with the tagline “Plus up your day.” This label promotes the product’s worth to consumers.

Sutton, 2019: Figure 1.

In keeping with the promotional price strategy, Disney uses messaging in promos such as “family discounts” and “limited-time offer.” These examples demonstrate the connection between Disney’s price policy and promotional messaging.

References

Baisya, R. K. (2013). Branding in a competitive marketplace. SAGE Publications.

Hughes, R. J., & Kapoor, J. R. (2010). William M. Pride.

Santos, P. (2012, June 4). Disney And The Power Of Pricing Power. Retrieved from https://247essayhelp.com/services/coursework-help/ 

Cameron, S., (2019, January 5). Disney World is getting so expensive it’s pricing out the middle class. Retrieved from https://historyassignmenthelp.com/ 

Hollis, N. (2019, April 15). Is Disney Plus too cheap for the premium brand? Retrieved from http://www.millwardbrown.com/global-navigation/blogs/post/mb-blog/2019/04/15/is-disney-plus-too-cheap-for-the-premium-brand

Sutton, K. (2019, November 14). Disney+’s Massive Marketing Campaign Is Just Getting Started. Retrieved from https://www.adweek.com/digital/disney-plus-massive-marketing-campaign-just-getting-started/

Running head: WALT DISNEY PRICING STRATEGIES 1

Walt Disney: Pricing Strategies

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WALT DISNEY PRICING STRATEGIES 2

Walt Disney’s Pricing Strategies

Various factors influence the five pricing strategies: premium pricing, penetration pricing,

economy pricing, psychological pricing, and promotional pricing.

Four key factors might influence the selection of the premium strategy. First, if the

company wants to insinuate high quality. The resultant consumer perception can help elevate or

maintain a premium brand value. Second, if the company intends to market to high-net-worth

individuals belonging to an exclusive group or image as demonstrated at essay help. Third, if the

company seeks to recover investments in the product quickly. Fourth, the company has many

versions of the same product. This fourth factor is the reason why the strategy is grouped under

product-line pricing strategies (Hughes & Kapoor, 2010, p. 466).

Penetration pricing is utilized for new products. Therefore, the main factor influencing

pricing is a new product status. Unlike premium pricing, which is largely influenced by product

line and the company sets high prices to suggest high-quality/luxury, penetration pricing involves

setting low prices to build market share quickly.

The main factor influencing the selection of economy pricing is an objective to sell at the

bare minimum price that returns a profit for the company. The company can sell the product to the

masses due to the low prices. The strategy is similar to penetration pricing due to the low prices,

but unlike penetration pricing, another factor is given extra consideration, namely, setting the price

above the break-even price. Whereas premium pricing is used when the company intends to sell to

high-income groups, economy pricing largely targets the masses to obtain greater profits.

Under psychological pricing, the main factors influencing strategy selection include the

company’s intention to encourage consumers to purchase based on emotional responses rather

than economically rational responses; and when the offerings are consumer products (Hughes &

WALT DISNEY PRICING STRATEGIES 3

Kapoor, 2010, p. 466). Premium pricing is ideal for both business and consumer products, but

psychological pricing, such as setting the price at $4.99 instead of $5 might not evoke emotional

responses for business products as it does for consumer products.

Whereas a luxury brand might emphasize the product in its 4Ps marketing mix, an ordinary

brand that prides in low-cost products might emphasize pricing. The latter company is likely to

adopt a promotional pricing strategy to emphasize its price competitiveness. A company might

also use promotional pricing to launch a new product, combining both penetration pricing by

setting a low price, and promotional pricing by embracing odd pricing and discounts.

Although Disney’s pricing is complex, the company largely employs a premium pricing

strategy. According to Baisya (2013), Disney is a premium brand and sets prices that are

significantly higher than similar products from competitors. Market sentiments show that the

company is nearly pricing out the middle class and recently adopted a dynamic pricing approach

to take into account seasonal changes (Cameron, 2019). The company combines its premium

marketing strategy with other strategies in some cases where it deems appropriate. For instance, in

a bid to even out demand through the year, Disney charges high prices during peak demand and

low promotional prices during periods of low demand. In another example of the company’s

pricing strategy, the launch of Disney Plus, Disney’s streaming service akin to Netflix, offers

important insights. The company adopted a penetration pricing strategy for the launch. Disney set

the launch price at $7 as a monthly subscription compared to Netflix’s $13. This penetration

pricing surprised many, leading some to wonder whether the price was “too cheap for the premium

brand” (Hollis, 2019). The company also uses psychological pricing as it indicates the monthly

subscription fee for Disney Plus as $6.99. Despite the complex pricing, Disney’s approach is

largely a premium pricing strategy as it commands a premium brand.

WALT DISNEY PRICING STRATEGIES 4

Disney, as a premium brand, has positioned itself favorably to charge premium prices for

its products. The company occasionally raises its prices. As indicated above, there are concerns

over whether the company is setting prices that are beyond the reach of the middle class. Despite

such sentiments, the company’s market share is growing and the brand remains successful.

Accordingly, the premium pricing is effective because the company has nurtured a premium brand

backed by high-quality products and an effective marketing strategy. As noted by Santos (2012),

Disney epitomizes the meaning of pricing power. Get any business essay help here. The company,

owing to its brand value, is in a favorable position to charge premium prices and still retain

customers. In this regard, Disney understands brand value and its implications for pricing. By

maintaining a high brand value, the company maintains its strong position to use a premium

pricing strategy.

Another factor that helps the premium pricing strategy is the focus on an exclusive market

niche. The company is in an unrivaled position to influence its market niche. This factor offers

Disney significant leverage to charge premium prices. Disney theme parks, for instance, not only

present a world of fantasy and fun that represent a niche market, but also entice customers to

return. The nurtured strong relationship with consumers gives Disney additional power to charge

high prices.

Disney largely aligns its pricing strategy with the messaging in promotions. While

launching the new streaming service, Disney Plus, the company emphasized the low price in its

“massive marketing campaign” (Sutton, 2019). This penetration pricing strategy has helped the

service to gain a large number of subscriptions in a relatively short period. In line with the

premium pricing strategy, the company emphasizes its brand value and quality of products in the

messaging in promotions. An example is the messaging in promotions for the company’s theme

WALT DISNEY PRICING STRATEGIES 5

parks. One promotion had the message “That’s the power of magic – you can fly”. Another

example is visible in Disney’s slogans that feature prominently in marketing campaigns. One such

slogan is “The happiest place on earth”. This slogan alludes to the value that the Disney brand

gives consumers.

A notable element of Disney’s messaging in its promotions is the tendency to insinuate the

high brand value of the Disney brand. This is perhaps a cautionary measure the company uses to

nurture and maintain its brand value even when adopting pricing strategies that set low prices. The

widely promoted Disney Plus, despite emphasizing the low price, set based on a penetration

pricing strategy, equally emphasized the value of the product. Figure 1 below is an example of a

campaign promoting Disney Plus at the time of its launch and features the tag “Plus up your day”.

This tag emphasizes the value the product offers to consumers.

Figure 1: Source Sutton, 2019

WALT DISNEY PRICING STRATEGIES 6

In line with the promotional pricing strategy, Disney uses messaging in promotions using terms

such as “discounts for the family” and “offer valid for a limited time”. These instances show the

connection between Disney’s pricing strategy and messaging in promotions.

WALT DISNEY PRICING STRATEGIES 7

References

Baisya, R. K. (2013). Branding in a competitive marketplace. SAGE Publications.

Hughes, R. J., & Kapoor, J. R. (2010). William M. Pride. Retrieved from

Essay Help

Santos, P. (2012, June 4). Disney And The Power Of Pricing Power. Retrieved from

https://seekingalpha.com/article/636651-disney-and-the-power-of-pricing-power

Cameron, S., (2019, January 5). Disney World is getting so expensive it’s pricing out the middle

class. Retrieved from https://www.businessinsider.nl/disney-world-expensive-middle-

class-2018-12/

Hollis, N. (2019, April 15). Is Disney Plus too cheap for the premium brand? Retrieved from

http://www.millwardbrown.com/global-navigation/blogs/post/mb-blog/2019/04/15/is-

disney-plus-too-cheap-for-the-premium-brand

Sutton, K. (2019, November 14). Disney+’s Massive Marketing Campaign Is Just Getting Started.

Retrieved from https://www.adweek.com/digital/disney-plus-massive-marketing-

campaign-just-getting-started/

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