Types of pricing strategy

pricing strategy
types of marketing strategy,
skimming pricing,
penetrating pricing

1. types Pricing Strategy MARKETING MANAGMENT UNIT 8

2. Premium pricing It is a type of pricing in which higher price is fixed than competitors to achieve premium position. The purpose of premium pricing is to cultivate a sense in the market that product is just bit higher in quality than the rest . For example,  Audi  and  Mercedes  

3. Penetration pricing It is a commonly used pricing method it is designed to capture  market share  by entering the market with a low price as compared to the competition. The  penetration pricing strategy  is used in order to attract more customers and to make the customer switch from current brands existing in the market. The main  target  group is price sensitive customers . Once a market share is captured, the prices are increased by the company.

4. Economy pricing This type of pricing takes a very low cost approach . Just the bare minimum to keep prices low and attract a specific segmen t of the market that is highly price sensitive . Examples of companies focusing on this type of pricing include  Walmart , Lidl and Aldi .

5. Skimming price Price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay and then lowers it over time . As the demand of the first customers is satisfied and competition enters the market, the firm lowers the price to attract another, more price-sensitive segment of the population. The skimming strategy gets its name from "skimming" successive layers of cream, or customer segments, as prices are lowered over time .

6. Psychological pricing Psychological pricing is  the practice of setting prices slightly lower than a whole number . This practice is based on the belief that customers do not round up these prices, and so will treat them as lower prices than they real. This type of pricing is extremely common for consumer goods It is a type of pricing which make impact psychologically on customers. Customers are more willing to buy the necessary products at RS. 199 than products costing RS. 200 The difference in price is actually completely irrelevant. However, it makes a great difference in the mind of the customers . This strategy can frequently be seen in the supermarkets and small shops.

7. Neutral strategy This type of pricing focuses on keeping the price at the same level for all four periods of the product lifecycle. However, with this type of strategy, there is no  opportunity  to make higher profits and at the same time, it doesn’t allow for increasing the market share. Also, when the product declines in turnover, keeping the same price effects the margins thereby causing an early demise. This pricing is used very rarely .

8. Captive product pricing It is a type of pricing which focuses on captive products accompanying the  core products. For example, the ink for a printer is a captive product  where the  core products  is the printer. When employing this strategy companies usually put a higher price on the captive products resulting in increased revenue margins , than on the core product.

9. Optional product pricing Optional product pricing means the pricing of   optional  or  accessory  products along with the main product. When a business decides of selling their products for a quite cheaper price than they generally would and depend on the optional products’ sales to meet up the difference, it is called  Optional product pricing.

10. Bundling price when two different products are combined together such as a razor and the lotion for shaving, and they are offered as a deal, then we get to experience the bundling type of pricing  first hand. This strategy is mainly used to get rid of excess stocks.

11. Promotional pricing strategy It is just like  Bundling  price. But here, the products are bundled so as to make the customer use the bundled product for the first time. This type of pricing focuses on buying one, and getting a new type of product for free. Promotional pricing can also serve as a way to move old stock as well as to increase  brand awareness.

12. Geographical pricing It involves variations of prices depending on the location where the product and service is being sold and is mostly influenced by the changes in the currencies as well as inflation. An example of  geographic  pricing can also be the sales of heavy machinery, which are sold after considering the transportation cost of different locations.

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