Pricing strategy and channel distribution are linked as proper pricing strategy helps control distribution channels and ensures prices remain within set limits. Good external distribution channels can also reduce the need for an internal sales team, saving money and reducing product prices.
The relationship between pricing strategy and channel distribution can be drawn from the fact that proper pricing strategy is one of the business strategies utilized by an organization, and effective control or monitoring of distribution channels helps to ensure that the Product prices remain within price limits set by an organization. Pricing strategy and channel distribution are also connected in the sense that close monitoring of distribution channels also helps to ensure that prices do not conflict with each other, as different distributors may be tempted to mark their own extra prices, leading to different prices and prices. a perception of price inconsistency. Another connection is the fact that a well-balanced external distribution channel can help a company that does not have the resources to distribute its products internally by further reducing the price of its products, since the company would not be required to spend money to set up and maintaining a sales team that would be involved in direct sales and other considerations.
One of the links between pricing strategy and channel distribution derives from the effect that lack of control over prices has on the manufacturer or importer of the product. Companies often use pricing as one of the effective strategy-making methods. As such, any deviation from the determined price range will jeopardize the business‘ efforts towards implementing the predetermined price. For example, a candle manufacturer might set a maximum price for a box of 50 individual candles at a set price that takes into account a profit margin by distributors and retailers. When distributors and retailers tag extra amounts above the maximum price set by the candle manufacturer, it defeats the company’s purpose, making it necessary for that company to implement measures that reduce these actions.
Pricing strategy and channel distribution are also connected by the fact that the availability of good distribution channels means that a company will not need to spend money on creating its own internal distribution channel. Creating a private distribution channel will involve hiring, training and paying a sales force, providing the sales force with logistics so that they can effectively carry out their roles, and establishing outlets for further distribution of the product. . Where the company does not need to do this, the money that would be saved will enable them to further reduce the price of the product.
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