Pricing policy

The price is an important element of the marketing mix and the only one who generate
income, while the other elements of marketing mix generates costs. Every company should use
this element like a stategic tool in making imporatnt marketing decisions. It can be said that the
price produces effects much faster than the others variables of the marketing mix.

Price management can be a quick way of gaining profit as well as losing it. It is the art
of positioning the product with the target customer’s needs, so that it meets their perception in
both quality and price. Price determination on the international market is influenced by a lot of
factors that are much more complex than those in the domestic environment. These factors are
classified into three major groups such as:
 internal company factors (company strategy, cost of production, nature of the product);
 market-specific factors (demand, competition);
 environmental factors (non-commercial barriers, regulations governmental, inflation).

Internal company factors

The cost
The cost is an esential factor who determinate the prices. One of the costs that
influences service prices is the cost of production. All prices of services and goods offered by the
Z Executive Boutique Hotel are the same for internal market, as well as prices for foreign
tourists but still are some differences depending on the currency used by the foreign tourist, the
inflation rate in that country, as well as the fluctuation of the exchange rate. The cost of
production is divided in two type of costs such as fixed costs and variable costs.

Fixed costs are normally not affected by changes in occupancy or sales volume of Z
Executive Boutique Hotel. They are said to have little direct relationship to the business volume
because they do not change significantly when the number of sales increases or decreases.
Variable costs are clearly related to hotel occupancy and business volume. As business
volume or occupancy increases, variable costs will increase; as hotel occupancy decreases,
variable costs will decrease as well. 

Company strategy
In order to achieve a complete and correct price strategy implies taking in account the
following criteria: temporal variation of demand, service offer and also the price level. All of
these criteria are taken into account when we want to determinate the price of a service and
having a determining role in the development of the price strategy planning phases.

Pricing strategy has been consistent with the differentiation objective, to provide added
value for a reasonable rate as opposed to discounting and the valuing our products and services.
Within the company strategy we choose the high price strategy for the hotel which involves
setting a price at a high price and then it can be reduced depending on other situations that may
 occur. The objective of this strategy is to gain high profit on a short period. We choose this
strategy because the Z Executive Boutique Hotel have a variety of services and goods on an
excellent quality and also additional characteristic and features. We have to consider how much
the britain people want to spend in our country and the idea that the people corelate an higher
price with an excellent quality of services.

The nature of the product

Also, the price will be determinate depending on the nature of the product. Our hotel
offer a wide range of luxury services and the prices are set according to the nature of the
services.

Services that the Z Executive Boutique Hotel offered to the customers:

 Room service  Housekeeping
 Car rental  Limousine service
 Dry cleaning  Laundry
 Bicycle rental  Airport shuttle
 Business centre  Shoe shine service
 Secretarial service  Wake up service
 Fax/Photocopying  Paid airport shuttle
 Projector  Business services
 Meeting/ Banquet facilities  Tours/Ticket assistance

Market specific factors

The demand and the competition

Other factors which influence the prices and they must be analyzed are the demand and
the competition on a market. The demand for our hotel services is determinated mainly by the
number of the tourists which are visiting our country and they need this type of services. The
United Kingdom is a developed country and also the fifth largest economy after good domestic
product (GDP), and the ninth largest economy after purchasing power parity. Purchasing per
capita is an important factor that influence the prices.
We must to take into consideration the fact that we are adressing to the Great Britain,
who is a powerfull country and people have an high purchasing power parity and we need to
adapt our services exactly to what British tourists wants.
Also the demand of services is influenced by the consumer`s lifestyle. We must to
know that the British are punctual- they consider that being late is rude, if you want to greeting
for something you may shake hands or give a smile. They have also Full English Breakfast
which is very popular and very consumed by them. This dish is rich with ingredients including
bacon, sausages, eggs, toast, mushrooms, tea, coffe, and very important the orange juice. All
these elements must be taken into account in order to attract the British to our hotel and to create
demand on the international market.
The competition- The level of prices are also determined and influenced significantly by the
competition. The Z executive Boutique Hotel is located in a well-known history area, the Hotel
rises in the University Square, close-by Saint George Square, Sutu Palace, Russian Church,
Romanian National Bank Palace, the famous Lipscani Street, Calea Victoriei and the historical
downtown. The prices of our hotel will be in a major way influenced by the competition which is
represented by the hotels Novotel Bucharest City Centre, Europa Royale Bucharest, Christina
Hotel Bucharest, K+K Hotel Elisabeta and DoubleTree by Hilton Bucharest Unirii Square. This
hotels represent a competition for our hotel because they offers similar services and practice
almost the same prices.
Environmental factors

Regulations governamental

The Brexit- The United Kingdom has a reputation for being one of the most open
economies to foreign investment, reflecting the values on which its economic approach is based,
including the welcoming of overseas investment. When the UK leaves the EU, the rules for
travelling in Europe will change.
When this thing will happen for the british people will be more difficult to travel in the
EU without having a passport or visa. The rules for travel to most countries in Europe change if
the UK leaves the European Union (EU) with no deal.

Non-comercials barriers

The United Kingdom is still member of UE, and that`s why for the moment there are
not non-comercials barriers between Romania and UK. And also the influence of intermediaries
is small because the services aren`t a tangible product, and therefore are eliminated the non-tariff
bariers.

Inflation

The rate of inflation is the change in prices for goods and services after a period. This
indicator will affect the prices in the UK if it exceeds the normal limit.

The objectives of the price policy

1. Following competition
We propose to have more good reviews from tourists like the other competitors of our
hotel.
 2. Reflection of product differentiation
We propose to highlight services most requested by tourists
3. Market penetration
We propose to enter on markets from other regions of Great Britain like Scotland or
Northern Ireland.

The pricing strategy- based on competition

This strategy is the simplest way to determinate the prices because the price level
practiced by the hotels competitors can be practiced also by the Z Executive Boutique Hotel.
Considering that the location of the hotel is in the center of Bucharest there are plenty of other
competing hotels that operate on the same market and offer similar services but with
differentiated prices.
Pricing strategy has been consistent with the differentiation objective, to provide added
value for a reasonable rate as opposed to discounting and devaluing our products and services.
High-quality facilities accompanied by exemplary personal service, differentiated from
competition in line with the overall brand strategy has proven to be a successful approach
generating high levels of repeat business. 

Estimate the sale price per room

STANDARD ROOM CITY VIEW ROOM

Price-89 €/night Price- 109 €/night
For 2 persons For 2 persons

SUPERIOR ROOM SINGLE DELUXE

Price-99 €/night Price-75 €/night
For 1 persons For 1 persons
 We choose this price per room because we use the penetration price but also we wish to
adjust our demand on the hotel services market.
During the holidays the prices will be increased depending on the demand, by the
number of tourists staying in the hotel.

https://www.yieldplanet.com/revenue-management-workshop-part-i/

http://www.economicsdiscussion.net/price/pricing-policy-meaning-objectives-and-factors/21757

https://www.google.com/search?
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https://www.ons.gov.uk/economy/inflationandpriceindices

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