What is Distribution Pricing in Market Strategy?

Distribution and Pricing Strategy In a Marketing Plan

            Marketing is concerned with giving the right product, to the right person, at the right place, and at the right price. Therefore, the price and distribution channels play an important role in any marketing strategy. Pricing is concerned with setting the prices that will help the company meet its sales and positioning strategies. Distribution, on the other hand, is concerned with the channels that the business will use to make its products and services readily available to its clients. Moreover, a business has to choose those channels that assist it to manage its prices and its overall marketing needs. Determining the price and distribution channels for tangible products is easy. However, marketing intangible products and services like restaurants bring in a number of problems. The objective of this paper is to outline the how restaurants can make both their pricing and distribution strategy decisions.

Pricing Strategy

            Determining the price of a product or service is one of the main components of a company’s marketing strategy. Pricing decisions are strategic decisions because they determine how customers view the product and whether they will buy the product. The price is also a core factor in differentiating the products and services one business from those of other companies. However, the price must align to other marketing strategies as well as the attributes of the product. Therefore, the restaurant managers will have to do some research in order to come up with the best pricing strategy.

According to Lamb, Hair, & McDaniel (2011), there are four main steps in setting the price for a product. The first step is establishing the goals of the price. There are three main pricing objectives: profit orientation, status quo, and sales orientation. The restaurant should review its overall objectives to determine the main objective of its pricing decision in order to choose a price that promotes the organization’s goals. For instance, if the restaurant managers want to be a luxurious restaurant in the market, they should offer a price that matches these objectives (Hung, Shang, & Wang, 2010).

The second step in setting the price is estimating the demand, costs, and profits. They managers should then look at the market conditions to determine whether their pricing strategy is realistic. This will involve determining the demand for the restaurants in the company’s target market, the costs for offering the services, and the resultant profits. This will help the restaurant manager to demine a price that allows the business to make profits that are consistent with the overall business strategy (Lamb, Hair, & McDaniel., 2011).

The third step involves choosing a price strategy. When choosing the price, restaurant managers must determine the initial price when introducing the product as well as the prices for the product during its life cycle. Further, the restaurant owners must determine whether they will offer the same price to all their clients or segment the price.

Finally, the restaurant marketers must determine the final price. This will involve looking at both the internal environmental factors like cost of production and the external factors like the demand and the price for similar offerings in the market. This will help the restaurant managers to come up with a price that meets the company’s objectives.

Distribution Strategy

The choice of distribution channels is important because it helps managers to control differentiated pricing and revenue. Unlike products, restaurant managers cannot ship the services to the sellers. Therefore, distribution in marketing involves word out to the potential buyers so they can come to the business premises where the service is offered. Some of the distribution strategies available to restaurant managers include direct mails, advertisement in the media, as well as follow up mails (Kimes, 2012).

            Determining the distribution also involves the choice of business locations. The manager must make sure that potential customers can access the business easily. The managers may also look at the location of other restaurant in order to determine their location (Juin, 2000).

References

Hung, W. T., Shang, J. K., & Wang, F. C. (2010). Pricing determinants in the hotel industry: Quantile regression analysis. International Journal of Hospitality Management, 29(3), 378-384.

Juin, S. С. (2000). Marketing planning & strategy. New York, NY: Thompson Learning .

Kimes, S. (2012). Pricing Strategy and Distribution Channels in Hotel. eCornell.

Lamb, C., Hair, J., & McDaniel., C. (2011). Essentials of marketing. New Jersey: Cengage Learning.