Marketing and Distribution Management Essay Example | Topics and Well Written Essays - 1500 words

Marketing and Distribution Management - Essay Example This is because it will be easier to determine price floors and ceiling so that adjustments are done within this range depending on the competition trend. The main disadvantage of the pricing policy is that it ignores the public image and the market position of the company. Value-based pricing policy can prove to be very profitable if the company is sure that what they charge is consistent with the value offered to the clients (Mohr, Sanjit, and Stanley 34-45). The disadvantage of this technique is that it can scare off potential customers who are price driven, and it can equally attract more competitors. Microsoft has adopted value-based pricing due to the outstanding performance of its new product Windows 8 on various gadgets including mobile phones, tablets, and other portable electronics. This is the best technique for this company since it has to manage its public image by offering quality products for sustained competitive advantage. Skimming is one of the traditional pricing c oncepts applied to a new innovative product that has just been launched in the market (Ferrell and Michael 56-61). It is suitable when the clients are price-insensitive and simply driven by the value of the product. On the other hand, penetration price is able to attract customers and gain market share and rise steadily after capturing clients. Customers tend to be very responsive to the price. In respect to Microsoft’s new innovation of Windows 8, it is imperative to underline that at its introduction what mattered was its value to the people and, hence, skimming technique application by the company. It is important to note that Microsoft operates in an oligopolistic market structure, and its survival, therefore, hangs on its ability to employ power-pricing model due to the uncertainty of the long-term price dynamics. Vertical marketing system involves mechanisms through which firms that supply a given product or service chain work in co-operation with the goal of all of the m maximizing benefit.