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Step 2: Recommend Offensive Dynamic Pricing Strategy

Your Virtual Internship coordinator asked you to develop an offensive dynamic pricing strategy by identifying products to lower prices on, where to set the reduced prices, when to reduce the prices, and how long to keep prices lowered. You need prepare a plan to market the lower prices to customers.

An Offensive Dynamic Pricing Strategy includes:

2 to 3 lead products on which to lower prices

Where to set the reduced prices

When to lower the prices

How long to lower the prices

A marketing plan for communicating price reductions to customers

Anticipate that the competition may react to your price reduction in a relatively short time frame. Create a game plan that describes how you will adjust prices 3-4 steps down the line depending on how the competition responds.

Determine how long to keep prices lowered. The benefits of a price reduction decrease after competitors realize your pricing strategy and launch an inevitable pricing response. After the competition responds to your reduced prices, for how long will it be worthwhile to maintain these prices?

You will also need to consider how customers will respond when you raise prices again. Will an increase in prices drive too many customers back toward the competition? How do these factors help you determine how long to maintain the reduced prices?

Determine your marketing strategy. Now that you have identified lead products and their prices, and determined when and for how long to set and maintain the price reduction, you must consider how to market the price reductions to customers.

Consider how you can leverage readily available resources to alert existing customers of the price reductions. Using tools like an attractor page on the website would be an easy way to get the word out with those shoppers who already turn to your eBusiness. Another option is to post your reduced prices on popular price comparison sites to raise awareness with those customers already comparing prices. Consider other efforts to entice shoppers who are not existing customers or actively comparing prices to buy. How could you reach this population directly? What efforts could you employ to get their attention? Develop a marketing strategy that outlines what effort will be used to announce the sale to existing and potential customers, including timing (when will it go into effect) and duration (how long will it run). Ensure the timing of your marketing plan is consistent with the pricing plan you already developed. If you explore any outside paid marketing strategies, take into account the effects of these strategies on your overall profit and evaluate if it is worth the investment.

The benefit of acquiring a customer is not limited to the immediate sale, but also has a secondary benefit in that the customer might bookmark your site and come back later.