Pricing Strategy And The Pricing Strategy: Dyson

4.4 Pricing Strategy For a number of reasons, price is one of the most important aspects of an effective marketing strategy (Gerstein & Friedman, 2015). First, price is the only marketing variable that generates revenue. Second, buyers see price as an attribute of value (Tanner & Raymond, n.d.). Consequently, an organization must carefully assess its internal and external environment to choose the most effective pricing objective, which—in turn—will drive a product’s initial pricing strategy. To remain profitable and provide value, Dyson should align its pricing objectives and initial pricing strategy with the firm’s mission and target consumers. Innovation—one of the firm’s core values—is costly. In addition, consumers often believe

This retail price is comparable to the firm’s other cordless vacuums, which have an original retail price of 499.99 to $699.99 (dyson.com). The price is also on par with similar premium innovative products such as the iPhone—that retails between $699 and $1149, depending on version (apple.com). At the same time, this price point positions the product outside of the price range of its competitors’ cordless vacuum—which have significantly lower retail prices. Additionally, this price will allow the firm to recoup its research and development costs within three years (refer to the Financial Projections section for additional details). To summarize, an organization’s pricing strategy is an important aspect of the marketing plan. The pricing strategy must align with an organization’s marketing objectives. Accordingly, Dyson should institute premium pricing and avoid discounting—to reinforce the firm’s value and market position.

4.5 Distribution and Supply

While many manufacturers rely on third party retailers to sell their products, it has become important for manufacturers to add a direct-to-consumer mix in their distribution supply chain strategy (Diorio, 2016). As a result, Dyson should sell the new product directly to consumers through its website. In addition, by selling the new vacuum directly to consumers at its existing brick-and-mortal stores Dyson will have the opportunity to demonstrate the technology in person and provide a world-class customer experience (Cuthbertson, 2016). However, until it becomes realistic for the firm to establish a wide network of physical stores, Dyson should market the new vacuum through retailers. Nevertheless, Dyson must employ selective distribution given the product’s price point and their target consumers. The retailers in the firm’s current marketing channel—Best Buy; Bed, Bath & Beyond; Target; and Costco—align with the firm’s marketing goals. By continuing to utilize its multi-faceted distribution channels, the organization will be able to reach a large number of