Week 2.7 Pricing Chapter 20
For the Lays product, there are many price-related promotions. Normally, the price discount will depends on the different supermarket or shop situation, they will decide when the lays potato chips has special discount. Furthermore, Lays company uses the cost based price strategy and then profit maximization. Moreover, the Lays prefers the muir-pack discounts(see below picture), like two lays potato chips for 5$. The customer buys more and will enjoy more discount.
(Lay’s Chips, Only $1.50 at Target!, 2016)
For psychological pricing tactics, Lays is using odd pricing. For example, the Lays potato chips will according to different size of package and make different price. For example, 0.99€, 1.99€, 2.99€.
Personally, the process of produces the lays potato chips will influence on the make prices. In other words, the process of lays costs to produce potato chips, which consists of main power, machinery, electricity, raw material and salary of employees.
Lays company uses the price differentiation regarding to the different region. For instance, the selling price of Lays chips in China will cheaper than the Netherlands. Perhaps because of the costs based or the economic conditions. Producing Lays chips in China could cheaper than the Netherlands. In China, there are more cheaper labour force and raw material like potato.
Actually, the price elasticity would not has such big impact. Because the prices of Lays chips already had the cheaper selling prices than other products. In addition, the Lays brand is the biggest market share in potato chips market. Due to the cost based that Lays could increase the price level or reduce the capacity of products, but the customer could still chose the Lays potato chips.
There are two strategies which are used by the manufacturer. One is penetration pricing; another one is price skimming. If lays chose the penetration pricing, the prices would be lower at the beginning of the selling. In this time, customer should more willing to buy Lays chips because of cheap, the sell will increase to some extend.
Bibliography
Lays Chips logo, Vector Logo of Lays Chips brand free download (eps, ai, png, cdr) formats. (2016). Logotypes101.com. Retrieved 14 September 2016, from http://www.logotypes101.com/logo/lays-chips
Dibbs, S. (2012). Marketing conccepts and strategies. Andover: Cengage Learning.
Lay’s Chips, Only $1.50 at Target! (2016). Thekrazycouponlady.com. Retrieved 9 January 2017, from http://thekrazycouponlady.com/2016/02/28/lays-chips-only-1-50-at-target/
Giant Hypermarket Snacks & Home Appliances Offers 14 Jun- 27 Jun 2013. (2017). Singapore Promotions. Retrieved 9 January 2017, from http://singpromos.com/home-appliances/giant-hypermarket-snacks-home-appliances-offers-14-jun-27-jun-2013-69852/
