Pricing is a very important aspect of the marketing mix since it is related to the positioning of the product or service being offered. It usually affects other elements in the marketing mix such as channel decisions, promotion and product features. This makes it an integral part that needs care and skill in its initiation.
Russo Acquisition and Construction is a new company in this market. As a result, the company has not yet established a favorable market share. Using the penetration pricing strategy would be the best approach for the company. Under this strategy, the housing price will be set at a lower rate compared to what is being offered in the market (Tehrani, 2010). This approach will help in capturing new consumers. As the demand of the housing services increase, the company will then raise its prices. Using this strategy would help in attaining favorable reputation and forming a formidable market share.
This strategy does not mean that the pricing needs to be extremely low. The company still needs to make sufficient profit for sustenance and continuity. To achieve this, there must be an ability of calculating all the relevant cost before making a decision on the exact prices to be charged. Understanding environmental factors such as legal constraints and competitor actions will be paramount. Knowledge regarding the competitor’s activities will help in identifying the most appropriate price.
This pricing strategy is more concerned with attaining a favorable market share compared to profit maximization. There will be a shift of strategy once the company has actualized the desired level of consumer base. It would be a good approach since the current consumers will be involved in promotion by the word of mouth. When people find favorable things, they tend to pass the message to their acquaintances and friends.
Russo Acquisition and Construction wants to offer an all in one package once it hits the market. All the services entailed in housing will come to consumers in one package. For this reason, the company is not going to outsource any of its services when it comes to distribution. Based on this fact, the company will not have the ability of distributing the housing services all over Philadelphia at once. The strategy to be adopted is operating in one area and the move on to other areas as a way of expanding the business. This will enable the company to serve the consumers in the best way possible. If the company opted to cover the whole region, there would be constraint in resources since the company has just entered the market. There are several areas that have already been identified as the starting points. Most of these areas are the ones that have not been fully exploited by the competitors. It would be easy to capture the market share since competition is not very stiff.
The reputation generated from these regions will set the benchmark of distributing the housing services in the entire Philadelphia city. There will be a pool of resources available to the company, starting from capital, market knowledge and competent employees. As the company sets its distribution all over the city, several offices will be created that will act as subsidiary of the head office. This will help in bringing efficiency to consumers.
The aspect of promoting the company is vital for success. After assessing several competitors, it is apparent that most of these companies are using advertisement as their main promotional strategy. Without any doubt, Russo Acquisition and Construction would also adopt this strategy. The main media outlets to be involved would be television, magazines and the internet. These outlets are preferred due to the appeal that they tend to bring to consumers (Tehrani, 2010). They tend to be more lively and enticing. The geographical coverage is also immense when they are used. It would be possible to reach as many people as possible.
A slogan to be used in the promotional aspects has been developed. It reads as “We can buy your house, sell your house, or fix your house.” It will be envisaged in all the documents involved with the company for potential consumers. As people tend to hear it more and more, the higher the likelihood of them outsourcing the company’s services.
In the initial stages, personal selling will also be incorporated in the promotion mix. The sales persons involved will be highly trained, and have adequate knowledge on what the company is undertaking. They will be involved in the distribution of brochures and explaining to consumers where they do not seem to understand. Personal selling is usually effective for a new product or service in the market. Consumers tend to have a connection with the individuals involved. There is immediate feedback to every query raised hence making the approach very effective (Tehrani, 2010). Some consumers fail to request for some services or products since they do not have a clear understanding of what they are. Under this approach, such instances would not be experienced.
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