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PRICING AND CONSUMPTION
ABSTRACT
In traditional business upon making pricing strategy, such factors as costs, retail channels, advertisements and consumptive psychology need to be taken into consideration. All these factors are under drastic changes due to intensive competition in market. Managers spend a lot of time thinking about how to get customers to buy their products and services but that's just half the battle. If organization wishes to build long-term relationships with customers they must make sure their customers actually use their products and the first step is pricing. According to this article, pricing pays an important role on the firm's long-term profits and customer retention. Prices of products and services influence the consumption patterns of people in the sense that if consumers would not use a product or service then they are unlikely to purchase it again. In this article the authors argue that the relationship between pricing and consumption lies at the core of customer strategy.
PRICING
In business it is possible to have the very best product or service and have excellent sales volume; but if the wrong pricing policies has been set on the product or the service, the business will eventually fail. In any business the ultimate reason for a pricing system is to make a profit from your work but the question is how to make a profit in the long run.
If we ask any executive how pricing policies affect the demand for a product or service we will get a reasonable reply but if we ask the same executive how pricing policies influence consumption (the extent to which customers use product or service), we will not get a clear answer.
Managers don't pay muc ...