Pricing Strategies

 

PRICING STRATEGIES:

Premium Pricing Strategy

Businesses use a premium pricing strategy when they are announcing a new product that has distinctive competitive advantages over similar kind of products. A premium-priced product is generally priced higher than its competitors.

Penetration Pricing Strategy

Marketers use penetration pricing to achieve market share by offering their goods and services at prices lesser than those of the competitors. Marketers need to get their products available in the market so that the products increase consumer awareness and persuade buyers to try the products.

Economy Pricing Strategy

An economy pricing strategy sets prices at the bare minimum to make a minor profit. Companies curtail their marketing and promotional costs. The key to a cost-effective economy pricing program is to sell a high volume of products and services at lower price. Large companies, such as Walmart, Dmart are capable of taking advantage of this low-price strategy, but small businesses will have trouble selling enough products at low prices to stay in business.

Price Skimming Strategy

Price Skimming is a strategy of setting high prices by introducing new products while the market has few competitors. This method lets businesses to maximize profits before competitors arrive in the market, then drop the prices.

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Psychological Pricing Strategy

Marketers use psychological pricing that boosts consumer to purchase products built on emotions rather than on common-sense logic. The example is when a company charges its product at Rs.199 instead of Rs. 200. Even though the difference is small, consumers perceive 199 as being substantially cheaper. This is known as the "left-digit effect."

Bundle Pricing Strategy

Businesses use bundle pricing to trade multiple products together for a lower price than if they were purchased separately. This is an effective strategy to move unsold items that are simply taking up the space.