Lecture Delivered by Ewere Okonta at a Business Seminar/Demo Class held on 18th
August, 2020, organized by Pricey’s Cakes and General Supply, Agbor, Delta State, Nigeria
What is a Small Business Enterprise (SBE)?
This is a business enterprise that meets specific economic criteria and is owned, operated, and controlled by one or more persons.
CHARACTERISTICS OF A SMALL BUSINESS ENTERPRISE:
- Lower Revenue and Profitability
- Small market Area of Coverage
- Sole or Partnership ownership
- Limited Area of fewer locations.
Pricing is one of the 4 P’s in the marketing mix. Others are product, place and promotion.
Pricing is the process whereby a business sets the price at which it will sell its products and services, and may be part of the business’s marketing plan.
It could also be seen as the value that is put to a product or service and it is the result of a complex set of calculations, research and understanding and risk taking ability.
Keynote: Always remember that your price makes a statement about your brand.
You want to sell your goods as soon as possible?
Then you need a pricing strategy. This simply means the different methods with which you can fix a competitive price for your goods and services. With the right pricing strategy, you can attract and retain customers, and be able to maximize your profit.
As a small business owner, fixing an effective price entails the following:
- The production and distribution costs
- What consumers are willing and able to pay for your product?
- What competitors are doing?
THE FOUR PRICING STRATEGIES
The following are the four basic strategies that every small business enterprise owner needs to know:
- Premium pricing: High prices are used as a defining criterion.
- Penetration pricing: Price is set artificially low to gain market share quickly.
- Economy pricing: no-frills price. Margins are wafer thin; overheads like marketing and advertising costs are very low, targets the mass market.
- Skimming pricing: High price is charged for a product till such time as competitors allow after which prices can be dropped. The idea is to recover maximum profit before the product attracts more competitors who will lower the price.
This a period of fierce competition in which traders cut prices in an attempt to increase their share of the market.
TIPS TO AVOID PRICE WAR WITH COMPETITORS:
- Develop your brand name to build recognition, and build resilience if price war ensues.
- Create a unique value which your business can add to stand out in the market place.
- Provide products or services that are exclusive to your business.
- Eliminate high maintenance goods and know what consumers do and don’t want through market research.
Depending on your business goals, there are a number of factors you should consider before setting a price for your product or services.
A good pricing strategy is essential in ensuring you make adequate returns and keep your business afloat or be the market leader.
Thank you all for listening.