Marketing 3500
Pricing of Hot Tub Boats Company
Product/Service
Hot tub boats are luxurious boats designed with tubs inside to keep clients warm while they sail in the open seas. The boat’s interior can be made from fiberglass and is heated using a stove that burns wood. The boat takes about two hours to heat up, but the result is an impressive temperature of 100 degrees Fahrenheit. The boat can be heated up using firewood, and the clients do not have to be afraid of ever getting burnt since the stove is made up of stainless steel and does not overheat because of the sea or lake water that keeps on cooling it. There are other boat tubs whose stoves are powered by diesel, and temperatures can be controlled to the client’s liking. The hot tub boats offer a luxurious experience for clients since they can enjoy boat riding even when the weather isn’t warm enough since the tub keeps them warm.
Pricing Strategy
The pricing strategy used for hot tub boats is the premium pricing strategy. Premium pricing strategy involves setting prices higher than competitors’ prices. This strategy works appropriately when the business offers a luxury or unique product (Dunsby, 2021). Hot tub boats are luxury boats that are pretty expensive to build and provide a luxurious experience to their clients. Therefore, the best pricing method, in this case, is the premium pricing strategy. However, for this pricing strategy to be successful, clients have to view the hot tub boats as a luxurious experience that they cannot experience elsewhere. This perception can only be achieved through proper marketing and product promotion. How the hot tub boats are packaged will also help in branding the products as luxurious products. The designs of the hot tub boats exude a certain level of luxury, making premium pricing the most effective pricing strategy.
Pricing Rationale
The rationale behind premium pricing is that the business needed to make profits from the sale and rent out of hot tub boats. Premium pricing will also help the business attain a larger market share of the luxurious boats’ market. Premium pricing will also convince consumers of luxurious goods of how good the product is, creating the perception that luxury is expensive. Since the cost of producing the boats is also high, premium pricing will allow the business to recover production costs and make profits that can be used in maintenance. Premium pricing will also create a brand image for the business as luxurious goods and might, in turn, increase sales of the product. Premium pricing creates a target market for the boats, and if adequately combined with marketing, then the product might generate so many sales.
Comparison Pricing
While our business decided to use premium pricing, other competitors decide to implement different pricing strategies. One particular competitor decided to use penetrative pricing to win over the market and create a larger market share for themselves. The downside to penetrative pricing is that the business might not make enough to recover enough revenue to cover production costs and cover maintenance costs for the boats. Another disadvantage of penetrative pricing is that consumers of luxurious goods link luxurious goods with higher prices; therefore, they might question the products’ standards. This, therefore, makes premium pricing the best option.
References
Dunsby, M. (2021). The 7 pricing strategies every business owner has to know. Startups.co.uk. Retrieved from https://startups.co.uk/strategy/pricing-strategies-price-skimming-penetration-pricing-and-premium-pricing/.
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