Pricing Strategies

League pricing strategies

Step 1: Selecting the pricing objective

League use survival as their major objective because they want to change the consumer wants from exported product into domestic product. As long as prices cover variable cost and some fixed costs, the company stays in business. Because this survival objective only works at a short term, they should use the maximum market share after they can change the mindset of the customer.

Step 2: Determining demand

Each price will lead to a different level of demand and have a different impact on a company’s marketing objectives. The normally theory that we know is the higher price the lower the demand. Now what affects the price sensitivity? Customers are less price sensitive to low cost items or items they buy infrequently. So if we took league as the example, it will be considered as a inelastic demand because the shoes are items that we buy infrequently.

Step 3: Estimating Costs

League use target costing. Target costing is costs change with production scale and experience. They can also change as a result of a concentrated effort by designers, engineers, and purchasing agents to reduce them through target costing. Market research establishes a new product’s desired functions and the price at which it will sell, given its appeal and competitor’s prices. This price less desired profit margin leaves the target cost the marketer must achieve.

The firm should examine each cost element: design, engineering, manufacturing, sales and bring down costs so the final cost projections are in the target range.

Step4: Analyzing Competitor’s cost prices, and offers

The competitors for League are nike, adidas, reebok, puma and etc that also sell sports shoes and the other apparels. The price that the company mentioned above are expensive already because they already well known in the world. So League once again wants to make a sport shoes that made in Indonesia so that people want to buy domestic products. And they...