Building pricing strategies for enterprises of the organic sector with a view to pursue marketing goals

Abstract

The paper reveals the essence of price in the market system and the role of pricing / marketing strategies in organic agricultural production. It is pointed out that a price is a key measure of social spending, because it manages the economy through the redistribution of values between economic entities. It is also noted that the dynamics of price movements in the organic sector relates to changes in quality and volume of production, promotion on the market, consumer solvency, product-consumption level, inventory levels and the overall economic situation of enterprises.The research paper presents an analysis of factors and competitive pricing strategies that affect prices of organic agro-food products. Competitive pricing strategies in the price management system are derived on the basis of two criteria: competitive advantages based on price and non-price factors, and the volume of the target market.It is found that in setting prices of organic agro-food products, both internal and external factors should be taken into account. Internal factors include cost price, innovativeness and uniqueness of production, life-cycle stage, and simultaneity between prices and expectations of buyers. External factors are price sensitivity of buyers, price levels of competitors, and macroeconomic conditions, such as inflation, taxes, excise duties, state price policy.Concerning price-quality indicators, a model of marketing strategy for organic agro industrial enterprises is suggested. A certified organic business that holds a leading position in the market often has to pursue a strategy of high quality in which high prices are motivated by quality and safety of organic products. It is concluded that pricing in the organic agro-food market is determined by high cost of production, and high quality and specific product properties play a crucial role for consumers.