20820014 - Entry 6

Low Price- Short term success.
Consumers will always ask for lower prices, but they don't always want them. Price is an indicator of value.

/ summary of article/
Cutting prices might seem strategic way to boost company`s profit but it may causes short term success and decrease long term growth. Because price isn't merely a reflection of product quality, it's an indicator of it as well.
If there are two TVs sold in electronics store, both have similar features and design characteristics but completely different price. Many people would choose lower price option, but some would buy more expensive TV. So, what would happen one or two years later? Obviously, there is some certain differences in quality. It would have to justify price is an indicator of value. If something is more expensive, it's usually for good reason.
Furthermore, high prices may to lower sales volume in the short term, but they need to expand their distribution networks. Due to expensive goods and service, you might lose some price sensitive customers. It can be odd to feel good about losing customers because of price, but if you're not, you may be backing yourself into a low-margin corner. You should admit that you are not Wal-Mart, very few companies can sustain lower price positioning.
Therefore, search and find a way to test a higher price point. Sometimes consumers pay bit more for something it makes them to feel better about that brand.

My opinion
In my thinking we should consider “is the benefit of my product to provide customers equal to its price? Or are customers willing to pay for my product?” Obviously, if usual cup of tea costs 6$, nobody wants to buy it. But if it is sold in premium restaurant with luxurious environment and excellent service as well as with fancy cup and spoon, probably some people willing to buy it.
Moreover, what about if i already sold my product in low price? Or i am in a competitive situation? What should i do? In this situation i will try to built or strengthen my competitive advantage.
Finally, i understood many beneficial things from this article, Pricing is always complicated. If i sell my product too low price, it might give expression like chinese fake poor quality product.
Reference:
http://www.businessweek.com/