Page 145 - Demo

be supported by the innovation of the solution and the problem to solve inthis country. For instance, a solution to save water would be particularly goodfor African countries, but also for European countries. 3. Product price is a critical element in the marketing mix, the strategicframework used by businesses to effectively market their products orservices. Setting the right price for a product or service is important toachieve the presence of the new offer on the market and maximise profits.Price optimisation is an ongoing process of finding the right balance betweenprofitability and customer value. The innovative contexts require a balance between capturing value for theuniqueness of the innovation and ensuring it remains accessible and relevantto the target market. It is essential for companies to be agile and adaptable intheir pricing approaches by following consumer preferences. In the case of afrugal solution, success depends on providing real value and meeting theneeds of environment-conscious customers. Price sensitivity can vary acrossmarkets and customers (persona). Pricing strategies for frugal and innovativesolutions include:a) Cost-plus pricingThis method calculates the total cost of producing and delivering the frugalsolution. Then it adds a markup (a rate of expected margin) to determinethe final price. This would ensure that all costs are covered while keepingthe price affordable for clients. This method is efficient for markets forwhich a lot of information has been collected in the past, but the strategycan be compared with a similar new product recently sold on the market. a) Market-based pricingWith this strategy, businesses set their prices based on the prevailingmarket conditions, competitor pricing, and customer preferences. They aimto align their prices with what customers are willing to pay for similarproducts or services on the market. This strategy has to be combined withan efficient communication strategy on the added value brought by thefrugal solution. It is crucial that this solution is placed on the right market totalk to the target customers.a) Penetration pricingThis strategy sets an initially low price to quickly gain market share andattract price-sensitive customers. As the frugal solution gains popularityand demand increases, the price can be adjusted accordingly. Thisstrategy is not margin-oriented at the beginning, but the aim is to bediscovered by customers as soon as possible and adopted after the firstexperience. The price has to be at the same level as the closest competitor1453.3 Approaches to European Commercialization Practices