Final Project: Marketing Mix - Price

Setting and maintaining a price on your product is a tricky thing, since markets change, demand rises and falls, and the product life-cycle ends. So, it's especially important to come out initially with a competitive yet reasonable price for your product.

Though promotional pricing, "or temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales" (Marketing: An Introduction, Armstrong/Kotler, pg. 294) can be a good idea sometimes, it does have its drawbacks. For example, it could make your product seem cheap or not valued well enough, and that might turn customers off. The only time Ergo might take part in promotional pricing is during heavy "party times", such as New Year's or Christmas, or even St. Patrick's Day.

What Ergo does believe in is competition-based pricing, which is "setting prices based on competitors’ strategies, prices, costs, and market offerings" (Marketing: An Introduction, Armstrong/Kotler, pg. 280). Always wanting to stay ahead of the curve, Ergo will constantly survey the market and see what other companies are pricing their drinks at and why. Has the market changed? Are they coming out with a new product? Based on these findings, we will set our price, always aiming to be a better value.

We know that "consumers usually perceive higher-priced products as having higher quality", but sometimes products aren't worth what they're sold for. You wouldn't want to pay $40 for a poor-quality vodka, would you? Of course not! Ergo is not low in quality in the slightest, but the demographics we are trying to reach want affordable fun. So, since most energy drinks cost anywhere from $.60-$3.00 per can, and vodkas found in supermarkets range between $12-$30 per bottle, and we are going to be selling it in a four-pack, Ergo is going to be priced at $7.95 per pack.