Marketing 649 Final. Disadvantages and disadvantages of pricing strategies.

Marketing
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Marketing
Disadvantages and disadvantages of pricing strategies
Firstly, cost based pricing provides the easiest way for businesses to calculate the price of their products. Additionally, a company can use a cost pricing method to ensure thy can maximize their profits. Thus, it requires little to no information and can thus be used in instances where demand and cost information may be unavailable. However, it can be only used during high competition periods since it may lead to increased loss of profit in the long run (Oritsematosan & Agwu, 2018). Apart from that, it does not put into consideration the demand side of the business that may be improperly used.
On the other hand, competition-based pricing sets prices of products based on research and analysis of the target market. This strategy avoids competition of prices that may damage the company financially since it is based on adequate information. However, disadvantage of this strategy includes the need for additional incentives to engage clients and possibility of lower profits due to the strategy covering only production costs.
Consumer value pricing enables a firm to set prices based on demand thus changing it as required to recover from sunken costs while enabling it to stay afloat. Customers can thus be willing to spend more on such a product due to its perceived value. However, this product must be customer based and has to be differentiated from any competitors (Oritsematosan & Agwu, 2018). Therefore, it requires additional finances to improve customer relations and get adequate feedback for any changes.
Consequently, the best pricing strategy involves consumer value since it puts into consideration the needs of the client when creating and reinventing pro...