Marketing Pricing Pricing Strategies

Question: Discuss about theMarketing Pricingfor Pricing Strategies. Answer: Marketing Pricing Pricing Strategy Proposal for TopOne Entertainment Limited Background of the Business Over the recent past, TopOne limited has become a household name in the karaoke industry in Singapore. Its lush themed rooms, excellent sounds, and karaoke systems have made the place an alluring destination for many individuals in the region. Also, its convenient location, at the heart of Bugis has made it a popular KTV in the country (TopOne KTV, 2016). In addition, its recording studio is an excellent facility for recording audios. The company also offers a vast selection of popular and trending songs for its clients. Current Pricing Currently, TopOne KTV has 55 rooms of varying sizes that are designed to cater for all its customers needs. The rooms are created to accommodate various groups from couples, small groups and medium groups as well as large crowds. The KTV offers discounts to its members. Specifically, members are entitled to discounts on food, drinks, and cover charges. They are also eligible for birthday treats, member promotions, and reward points. As of now, a two-year membership plan goes for S$10. On the other hand, the recording studio fee for new clients is S$30 per song. Alternatively, the clients may pay S$50 per hour (TopOne KTV, 2016). It is imperative to note that the executive nature of the facility forces the company to set its prices relatively higher than those of its competitors. At the moment, the main competitors include K-Box, Dynasty Classic KTV, Crown Music Box and K-garden Karaoke among others. The high prices charged have had significant effects on the degree of customer inflow. As such, many potential customers are scared off by the comparatively high charges on the companys brochure. Consequently, this has substantially affected the companys profitability. For this reason, it is crucial for the company to adopt a new pricing strategy to turn the business around and improve its profitability. Proposed Pricing Strategy Given the nature of the karaoke industry in Singapore, the company has a number of pricing strategies to choose from. However, selecting the most efficient strategy for the facility is crucial to the future success of the business. As of now, adopting a penetration pricing strategy in the karaoke industry will go a long way in enhancing the level of the companys profits. Typically, this strategy pursues the objective of maximizing the number of clients and members through lower prices. In this plan, the company sets a low price to increase the customer traffic into the facility (Spann, Fischer, Tellis, 2015). In turn, this brings about an increase in the enterprises market share and sales. Afterward, when a large market share is attained, the company may raise its prices back to the initial level. Currently, the penetration pricing strategy is the most effective strategy. Primarily, this is attributed to the fact that the demand for karaoke boxes in the country is highly elastic. As such, customers are sensitive to changes in prices and the quality of the service offered. Thus, providing high-quality karaoke services at relatively affordable prices would result in an increase in the overall demand for the service (Spann, Fischer, Tellis, 2015). What is more, the company may reap from economies of scale, given its large operational capacity. Specifically, the company will experience decreases in operational costs as the volume of its clientele increases. Furthermore, the nature of TopOnes lavish services is one that gains mass appeal. For this reason, the penetration strategy would work best in restoring the company back to high profitability. It is imperative to note that a slight decrease in the companys prices, just below the prices charged by its closest competitors will entice customers to visit the facility. Subsequently, this would not only increase the amount of money collected as karaoke fees but also from food, drinks and other services offered within the karaoke box. The company may try to recoup the lost profits by slightly increasing the prices of foods and beverages in the facility. Often, the clients are less keen on the prices of foods and drinks than the entry fee. In this regard, increasing the charges on the snacks and drinks may recompense the club the amount lost in the studio charges. Notably, the affordable prices would also entice customers to visit the facility more regularly. In some instances, the regular customers may recommend their friends and families to visit the place and experience the serenity of the lushly themed rooms, excellent sound, and excellent karaoke systems. Given the quality of the services rendered in the institution, most of the clientele may opt for a membership plan at TopOne. The more the members, the more profits the company will reap through customer loyalty. Thus, once the number of long term members in the business increases, the firm may opt to increase its prices back to normal. At this point, the profitability of the KTV will be restored. Referencing Spann, M., Fischer, M., Tellis, G. (2015). Skimming or Penetration? Strategic Dynamic Pricing for New Products. Marketing Science, 34), 235249. TopOne KTV: Recommended Karaoke Studio. (2016). The Best Singapore. Retrieved 9 February 2017, from https://www.thebestsingapore.com/best-place/topone-ktv/