Pricing strategy is one of the most important parts of the entire marketing effort. While there are many factors that influence the potential buyer, an attractive price plays a key role in their final decision-making. A well-thought pricing strategy will allow the company to maximize its revenue, promote its products and gain market share. Distributions channels, on the other hand, determine how the product will reach the potential customers and how much would be spent on delivery expenses.
There are two pricing strategies that could be used in promotion of a new product: penetration strategy and skimming strategy. Penetration strategy is aimed at penetrating new markets, discouraging the competition, gaining market share, and making a name for the company. This strategy supports selling products at lower prices (Penetration pricing, 2016).
Skimming strategy, on the other hand, is aimed at wealthier customers. Its purpose is to quickly generate income and recover the costs of expensive product development. This kind of strategy is beneficial for premium-class products (Price skimming, 2016).
The only available strategy for MM is the Penetration strategy. Our product is aimed at medium and low-income customers, which is why we cannot afford to sell it at a higher price. In addition, we currently have no market share in the regions viewed for expansion. Once we earn our market share and the customers become familiar with our products, we would be allowed to sell them at a higher price.
A defined distribution strategy is necessary for MM, as the company is going to expand into countries located on the other side of the globe. There are several points that need to be taken into consideration: reach, cost, contribution, support, and customer service (Linton, 2016).
The company should focus on working with the local wholesalers and retailers in order to promote its product to the local markets. Other than that, MM should pursue internet sales and mail orders to reach out to customers in other locations, bypassing the middleman (Markgraf, 2016).
It is more economically feasible to work with retailers rather than trying to establish a base for direct sales without any knowledge of the local market. Establishing a direct sales supply chain would greatly inflate the costs of the product, as it will include shipping costs, maintaining stores, hiring and training employees and managerial personnel (Sehgal, 2010).
MM must work with the local retail companies in order to reach out to additional customer base without extra market costs. It would be prudent to strike a deal with the local mobile operators, who would promote our brand and our products in exchange for a purchasing discount. Making deals with large regional corporations is also a good way to get clientele among their employees (Kavan, 2016).
The company’s distribution plan features two additional areas of expenses. The company will need to train and instruct the distributors to use the gadget and all of its features. In addition, MM will need funds for the marketing campaign in the target regions.
Our retailing partners will deal with the majority of individual customers, addressing their needs and answering their questions. However, MM should directly supply its products to its major customers – the companies that would purchase our products en-masse.
In promoting its smartphone to Russian, Indian, and Eastern European markets, MM should follow the Penetration strategy when considering the price of the product. In order for the products to reach the clients, the company should work with the local retailers, while restricting direct sales only to major customers.
Kavan, K. (2016). Smartphones in the office: The implications for businesses of a smartphone in every pocket, purse, and briefcase. Web.
Linton, I. (2016). How to develop a distribution channel strategy. Web.
Markgraf, B. (2016). Distribution methods and marketing plans. Web.
Penetration pricing. (2016). Web.
Price skimming. (2016). Web.
Sehgal, V. (2010). Cost of sales and supply chain competence. Web.