BBA 3201 Unit VI Research Project

BBA 3201 Unit VI Research Project

Columbia Southern University


Marketing is a very broad term that encompasses many different elements of business and requires a great deal of strategy in terms of planning and direction. Two very important elements of marketing are pricing and promotion. Companies may use differing pricing strategies such as premium pricing, penetration pricing, economy pricing, psychological pricing, or and/or promotional pricing when considering what value to place on particular products and services. Pricing can be a very tricky aspect within a firms marketing strategy as there are many other factors to consider and it requires a great deal of understanding of both the product and the target market. Essentially, pricing is what paints a picture for consumers of the value provided by and placed on a particular product by an organization. On top of that, in setting prices, firms must also consider different promotional strategies to back up and communicate pricing to customers. Ford Motor Company uses an array of both pricing and promotional strategies in communicating the value of its products and services to consumers. This essay will examine the various pricing and promotional strategies commonly used by Ford Motor Company and determine the effectiveness of these various strategies in communicating the value generated by the brand.

Pricing Strategies

As one of the four P’s of marketing, pricing can have a direct impact on the revenue and profits of a firm. Price is the monetary value or otherwise that is charged for an item that is of any value. Nearly ay transaction that takes place in todays economies involves some sort of price. With this in mind, it can been seen how price plays an extremely important role in the marketing strategies of various firms and how a managers decision to change prices can have a hefty influence on both profit and revenue. As many customers generally judge the value of a product based on the price placed upon it, it is imperative that managers price products appropriately so that a consumers perceived value of an item matches the actual price placed upon an item and that the customer feels a sense of agreement with the price. As pricing can have such a direct impact on a firms profits, marketing managers employ a number of pricing strategies in order to price products accordingly and meet the demands of target customers. These pricing strategies include premium pricing, penetration pricing, economy pricing, psychological pricing, and promotional pricing. In employing these various pricing strategies, it is also imperative that marketing managers be aware of the ever-changing demands of the intended target market and also with the pricing of competitors for similar products (“Columbia Southern University Unit VI Lesson,” 2016).

Premium pricing is typically used when an organization introduces a new product that presents itself with a distinctive advantage over competitors and similar products and therefore is priced higher. Research shows that premium pricing is most effective in the early stages of a products life cycle. In order to persuade customers to pay higher prices for products under the premium pricing strategy, companies must create an image of quality and prestige to give customers the perception that the particular product is of higher value and therefore worth the additional costs. In order to support this perception of a higher quality product with higher costs, marketing managers must craft promotional strategies that correlate with the pricing of the product (Woodruff, 2019). According to Jim Woodruff (2019, n.p.), an organization will need “to synchronize its marketing efforts, its product packaging and even the décor of the store must support the image that the product is worth its premium price.” One great example of premium pricing is Louis Vuitton. Among other things, Louis Vuitton makes women’s purses and wallets. Though these purses and wallets function exactly the same as less expensive brands, Louis Vuitton has created an image and brand surrounded around prestige and very much so follows the premium pricing strategy. Where a purse that may cost $50.00 to $100.00 at a normal retailer, a similar product at Louis Vuitton will cost upwards of $1200.00 to $1400.00.

Penetration pricing is a strategy used by marketers in an effort to gain market share by offering their products or services at prices that are considerably lower than those of competitors. This strategy is an effective way to make new products not known within the market and aids in raising consumer awareness of these new products. Marketers use this strategy knowing that the lower prices could possibly result in losses to the organization initially, however, the expectation is that once the product has successfully penetrated the market, prices will be raised to a more profitable level (Woodruff, 2019). For instance, a television provider such as DIRECTV, offering customers a drastically lowered introductory price or free products for a period of time in order to gain market share. Then, at the end of the promotional period, there is a sharp increase in the price of the service.

The economy pricing strategy offers more of a no frills type price. Margins within this strategy are much thinner than in others, however, overhead costs such as marketing and advertising are also typically much lower. This type of strategy aims to target the mass market and has a high market share. Since companies are typically setting prices at the bare minimum, individual profits on items are often very small within this type of strategy so organizations look to sell products and services in high volume. Promotional strategies for economy pricing are minimized to the fullest extent possible in order to reduce costs therefore companies do not spend a great deal of money promoting these products. Wal-Mart is a very good example of an organization that is able to take advantage of economy pricing and sell high volumes of goods at lower costs (Woodruff, 2019).

According to Boachie (2016, n.p.), “psychological pricing is a pricing/marketing strategy based on the theory that certain prices have a bigger psychological impact on consumers than others.” Psychological pricing is a clever way to increase sales without having to drastically reduce price. It is essential to gauge the emotional response a target market has to the specific product being priced. One very common method of psychological pricing is known as charm pricing. Charm pricing relies on consumers to make purchases based on emotional decisions and feelings. If a company prices an item at $99.99 instead of $100.00, customers are instinctively more likely to pick the item at $99.99 due to the feeling that they are saving money although the savings are virtually nothing. Psychological pricing trusts that the mind will assume that money is being saved and therefore customers will not think any more about the price of a product past their initial response (Durden, 2019).

Monger (2012) explains that promotional pricing is a part of marketing that is often times used in direct coordination with promotions and sometimes the two separate elements can be so interrelated that the pricing policy is promotion oriented. Promotional pricing is typically a short-term strategy for an organization although some organizations do use recurring promotional pricing as a means of attracting and maintaining budget-minded consumers. Companies must be cautious in the use of promotional pricing not to overuse the tactic as customers can come to expect the lower price as the norm (Kokemuller, n.d.). Promotional pricing is a very powerful sales tool used by marketing managers that can be very effective at increasing the demand for a product, increasing market share, and attracting new customers to a product or brand. Promotional pricing offers discounts to customers on particular products based upon an informed decision made by a company to give a price discount and can come in many different forms. Typical promotions are ones such as “buy one get one free” or offering a specific percentage off of an item for a specified period of time (“Promotional Pricing,” n.d.).

Ford’s Pricing Strategy

Ford Motor Company utilizes various pricing strategies within its marketing plan to support its business. Although the company uses all five of the pricing strategies dependent upon the market it is targeting and what product is being offered, the brands price is most notably represented by the premium pricing strategy with a mix of promotional pricing added in. As Fords prices vary depending on the market, the companies marketing mix involves using various strategies to determine appropriate prices based on market and business conditions. Ford applies the premium pricing strategy to a number of its Ford products and to its Lincoln line up of luxury vehicles (Furgeson, 2017). The premium pricing strategy has proven to be effective for Ford as in recent years the company has seen in its largest market, the North American market, a large shift in consumer preference towards the companies top selling products, both trucks and SUVs. “With an increasing demand for trucks and SUVs in the North American region, it is likely the average selling price of Ford Motors’ vehicles in North America can increase at an accelerated pace as its product portfolio shifts toward higher priced vehicles” (Team, 2018, n.p.). The company has been able to successfully apply premium prices to its top selling products and continues to expand the demand for these products despite the higher prices.

Communicating the Message

As Ford primarily uses a premium pricing strategy within its marketing mix, the company must also use promotional strategies that demonstrate the high value of the brand, most notably within its line up of pick-up trucks. In 2014, the company began its most comprehensive truck marketing campaign ever as a means to introduce and promote the new variant of the F-150 as the toughest, smartest, and most capable F-150 ever. Promotional ads within this campaign discussed the trucks new and improved capabilities and ability to get the job done. For quite some time Ford has used the line “Built Ford Tough” in its ads and under this new strategy has also implemented the term “the future of tough.” In addition to TV ads, Ford utilizes radio and print ads as a means to reinforce the F-150s durability and capability message while showcasing Fords long running leadership within the truck segment (“Ford Starts Most Comprehensive Truck Marketing Campaign to Introduce Toughest, Smartest, Most Capable F-150 Ever,” 2014). By using these promotions, Ford is able to demonstrate the value of its brand to customers through messages detailing the F-150’s great capabilities which in turn supports the company’s premium pricing strategy.


Pricing and promotional strategies play a very important role in any organizations marketing plan and can often go hand in hand. Although most organizations employ many separate pricing strategies, additional attention may be paid to some strategies over others. Strategies will depend upon target markets and the needs and wants of consumers. Marketing managers must be in tune with changing markets and market demands and price products accordingly. Ford Motor Company employs a host of pricing and promotional strategies within its marketing mix to connect with its target customers. Fords recent success within the truck and SUV markets and the markets shift to a higher demand for these items has allowed the company to employ a more aggressive premium pricing strategy while keeping demand high. Ford has done a great job in creating promotions that support their premium pricing in communicating to customers the value of the brand, particularly with its promotions of the Ford F-150.


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Woodruff, J. (2019, March 4). Different Types of Pricing Strategy. Retrieved from