Name: Aquino, Juan Paolo C.

Section: BSBA MM2-1

PRICING STRATEGY PRESENTATION

Topic: Price Quality Position Matrix

Introduction

A price is the amount of money charged for a product or a service, the sum of the values that
customers exchange for the benefits of having or using the product or service. Price is the only
element in the marketing mix that produces revenue, all others are costs. Setting the right price
is one of the most complex tasks. Good pricing starts with customers and their perceptio n of the
value of the product [1]. Based on Intelligence Node Agile pricing strategies is one of the biggest
question’s retailers face for a reason. The relationship between an item’s price and its quality and
perceived value to consumers is often times the deciding factor in shaping whether or not a
purchase ever takes place [2]. He also stated Pricing strategies usually change as the product
possess through its life cycle [4]. The introductory stage is especially challenging that we can
distinguish between pricing a product that imitates existing products and pricing an innovative
product that is patent protected.

Price

Higher Lower

Premium Good Value

Higher
Strategy Strategy

Overcharging Economy
Lower
strategy Strategy

Philip Kotler designed a new model also known the Nine Quality-Pricing Strategy, consists of
a matrix of nine pricing options. The goal is the assist companies to position products based on
their perceived place in the market relative to the competition. This model relates pricing to the
quality delivered [3]. Price Quality Matrix centers on the cross-section between the two metrics
that lend the model its name. By determining the position of your products or services relative to
the competition, retailers are able to use the price and quality of each item to identify where they
stand in the market [2].
 How you price your products plays an integral role in how they’re perceived by consumers.
So, it’s important to ensure that the quality of your offer complements your price point
accordingly. Based on Kotler’s nine-variable model, let’s take a closer look at the possibilities that
result depending on how price and quality interact with each product or service.

Premium (high price/high quality): When a product’s high price is matched by its quality, this
creates an image of a premium item that consumers consider a worthwhile investment, such as
Apple products.

Over charging (high price/medium quality): Even if a product’s quality is sound, it can be tricky
to elevate the price point beyond what the product offers. Tread carefully in this scenario.

Rip off (high price/low quality): In case the name of this category isn’t a dead giveaway, steer
clear of this one at all costs, as selling a subpar product for such a high price point is a sure fire way
to stir bad word of mouth when consumers get wise.

High value (medium price/high quality): Conventional wisdom says that your price should
surpass your product quality, since the implication is that your business will be able to turn a profit
more easily. Yet, it may be worth it to offer a high-quality product at a slightly lower price upfront
to build word of mouth.

Average (medium price/medium quality): As its name implies, these products are the very
definition of “you get what you pay for.” Generally, consumers know that the value they receive
from a given product is in line with the price point. It’s always a good idea to offer a lower price d
alternative of premium products to encourage engagement.

False economy (medium price/low quality): The aforementioned danger in overpricing your
products applies here as well, though to a lesser extent. You’re better off developing a better
product or dropping the price to fall more closely in line with your product offering.

Superb value (low price/high quality): The best-case scenario for consumers, a high-quality
product with a low price can be tricky to pull off and could end up getting into your bottom line.

Good value (low price/medium quality): Consumers are always on the lookout for an affordable,
quality product. To foster long-term customer loyalty, it might be worth it to feature your
medium-tier products at a slightly lower price point.

Economy (low price/low quality): There’s something to be said of economy options. In your
business, this may simply be a free version of a product that offers fewer features. However, it’s
an easy gateway to establish more profitable customer relationships down the line and well worth
considering.
[1] Kotler, Philip.; Armstrong. (2015) Principles of Marketing 14th Edition: Pricing Strategy,
Englewood Cliffs, N.J.: Prentice Hall page 284.

[2] Kotler, Philip (2011) Kotler's Pricing Strategies Online Tools & Templates, In The Press INC.
https://upboard.io/kotlers-pricing-strategies-model-online-tools-templates/

[3] Node, Intelligence (2018) HOW TO USE THE PRICE QUALITY MATRIX TO OPTIMIZE YOUR
PRODUCT PRICING,

[4] Kotler, Philip; Armstrong (1999) Principles of Marketing 8th Edition: New Product Pricing
Strategies, Englewood Cliffs, N.J.: Prentice Hall page 329-330

Methodology

The Euphorbia hirta also is known as a Tawa-Tawa is commonly used as a medicine that every
Filipinos believes that Tawa-Tawa is a cure for a dengue patient. Right now, I would like to
introduce the Tawa-Tawa juice in my home town in South Ville IV Santa Rosa Laguna and make a
free sample of my product and prepared some questionnaires for them to let them decide what I
need to change, to make and to improve.

Results and Discussion

Figure 1
At the figure 1. I choose this Mango Juice made by
Desika Foods, Company and I used this as my
inspiration and desperation to came up with my idea.
The differentiation of my product and this mango juice
is the word legitimate organic juice because this mango
juice added some artificial in their ingredients it’s not
total good for our health. I’m so sure that my Tawa-
Tawa juice is safe and also non-allergenic because of
the organic process of making. I think the weakness of
my product is not known by some of the customers
because they already identified it as a tea or medicine but for me, I can use it as my strength and
I think I’m already to come up to my strategy especially for pricing.

Formulated Pricing Strategy

The pricing strategy that came up on my mind is the Economy pricing strategy because this
strategy produces a good quality product but charging in low price, Why? Because my business is
new for anyone. The total price of Tawa-Tawa powder is P89 pesos and 1 Gallon of water is P25
and for the cups cost of P55 pesos and brown sugar and white sugar is cost 55x2 = 110 and the
total of product that I produce is 40 cups.

89 + 25 + 55 + 55 × 2
= 6.975 or 7 Pesos each
40