Page 3: Price
Price is determined by a number of factors. These include market share, competition, material costs or how the customer sees the value of the product. Businesses can use different pricing strategies for various purposes. Each gives different impacts.
Pricing strategies may be cost based or market-orientated:
- Differential pricing this gives different prices for different groups or types of customers. Parcelforce Worldwide is able to negotiate prices with business customers (B2B and B2C) based on their exact sending profile (for example, volumes, weights, destinations).
- Price leadership where a market leader sets market price. In the non-urgent market, Parcelforce Worldwide is looking to achieve some degree of price leadership by finding lower cost international delivery models and passing some of this cost saving to its customers.
- Market penetration pricing may be low in order to gain a foothold in a new market or with a new product. To take market share with its new Express service, Parcelforce Worldwide needed to price keenly.
- Competitive pricing where price matches or undercuts those of competitors. This could, for example, increase market share with Parcelforce Worldwide”s new Priority service.
Other pricing strategies a business may use include:
Parcelforce Worldwide”s market is price sensitive and consumers have a choice. New competitors affect its choice of pricing strategies. Parcelforce Worldwide has differentiated its products by offering services that offer a balance and choice between speed and value for money. Its express service leads on speed; its non-urgent product leads on price. This clearly sets Parcelforce Worldwide as the price leader in the non-urgent sector.