Pricing Strategies in marketing for marketers

Certainly:

1. **Cost-Plus Pricing**: Add a fixed markup to the production cost.
2. **Value-Based Pricing**: Set prices based on perceived customer value.
3. **Competitive Pricing**: Price according to what competitors charge.
4. **Penetration Pricing**: Start low to enter the market; gradually increase.

1. Pricing strategies

2. New-Product Pricing Strategies Two broad strategies: market-skimming pricing Market-penetration pricing Market –Skimming Pricing: Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the co makes fewer but more profitable sales. E.g., Sony CTV prices

3. Market skimming makes sense only under certain conditions. The product’s quality and image must support its higher price and enough buyers must want the product at that price. Competitors should not be able to enter the market easily and undercut the high price.

4. Market-Penetration Pricing: Setting a low price for a new product in order to attract a large number of buyers and a large market share. Several conditions must be met for this low-price strategy to work: The market must be highly price sensitive Economies of scale in production and distribution

5. Product Mix Pricing Strategies Product Line Pricing: Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices. E.g., Bata offers an entire range of footwear in India.

6. Optional-Product Pricing: The pricing of optional or accessory products along with a main product. E.g., A car buyer may choose to order a GPS Navigation. Captive-product pricing: Setting a price for products that must be used along with a main product. E.g., razor blade catridges , video game consoles, printer catridges .

7. In case of services, This captive-product pricing is called two-part pricing. Fixed fee plus a variable usage. E.g., An amusement part entry fee plus food expenses and other in-park features.

8. Product Bundle Pricing: Combining several products and offering the bundle at a reduced price. E.g., Mc.Donald’s combo pack of a burger, fries, and a soft drink Price bundling can promote the sale of products consumers might not otherwise buy, but the combined price must be low enough to get them to buy the bundle.

9. PRICE-ADJUSTMENT STRATEGIES Cos usually adjust their basic prices to account for various customer differences and changing situations. Discount and Allowance Pricing: Most cos adjust their basic price to reward customers for certain responses, such as early payment of bills, volume purchases, and off-season buying.

10. Discount: The many forms of discounts: Cash discount: a price reduction to buyers who pay their bills promptly. E.g., “2/10, net 20” which means although payment is due within 30 days, the buyer can deduct 2 percent if the bill is paid within 10 days.

11. b) Quantity discount: a price reduction to buyers who buy large volumes. An incentive to the customer to buy more from one given seller, rather than different sources. c) Functional discount(trade discount): It is offered by the seller to trade-channel members who perform certain functions, such as selling, storing, and record keeping.

12. d) Seasonal discount: A price reduction to buyers who buy merchandise or services out of season. Seasonal discounts allow the seller to keep production steady during an entire years.

13. Allowance: Another type of reduction from the list price. 1) Trade-in allowances are price reductions given for turning in a old item when buying a new one. e.g., automobile industry 2) Promotional allowance: Price reductions to reward dealers for participating in advertising and sales support programs.

14. Segmented Pricing: Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs. Customer segment pricing: different customers pay different prices for the same product or service. E.g., Museums – a lower admission fee for students and senior citizens.

15. Product-form pricing: different versions of the products are priced differently. E.g. ½ litre water bottle priced at Rs.10 whereas 1 litre water bottle priced at Rs.20/- Location pricing: A co charges different prices for different locations, even though the cost of offering each location is the same. E.g., Movie theatres, circus etc

16. Time Pricing: a firm varies its price by the season, the month, the day, and even by the hour. E.g., Airlines, Resorts etc For segmented pricing, certain conditions must be met: The market must be segmentable The segments must show different degrees of demand. Segmented pricing must also be legal.

17. Psychological Pricing: Many consumers use price to judge quality. It is a pricing approach that considers the psychology of prices and simply the economics; the price is used to say something about the product. Promotional Pricing: Temporarily price their products below list price and sometimes even below cost to create buying excitement and urgency.

18. Geographical Pricing: Setting prices for customers located in different parts of the country or world

19. PRICE CHANGES Initiating Price Changes: Either Price cut or Price increase Initiating Price Cuts: Some situations lead to cut the price: Excess capacity Falling demand

20. Initiating Price Increases: Reasons might be: Cost inflation i.e., rising costs Over demand

21. Responding to Price Changes

22. Reduce the price to match the competitor’s price. Cos might reduce product quality, services and even marketing communication to retain profit margins. Raise the perceived value of its offer. Improve communication, stressing the relative value of its product over that of lower-price competitor.

23. B Improve quality and increase price moving its brand into a higher price-value position. Launch a low-price “fighting brand” adding a lower-price item to the line or creating a separate lower-price brand.