1. “Pricing Products: Pricing Strategies”
Presented By : Maria Pirwani
Presented to: Ma’am Amber Raza
Dated: 4 th . April.2011

2. New Product Pricing Strategies:
What are the essential strategies
to price their product?

Market Skimming Pricing

Market Penetration Pricing

3. Market Skimming Pricing:

The word skimming means “ Being
on the surface”.

Setting a high price for a new
product to “skim” revenues layer-bylayer from those willing to pay the
high price.

Company makes fewer, but more
profitable sales.

4. Market Skimming Pricing:
Example:

5. Market Penetration Pricing:

The word penetration means “Going
within the Market”

Setting a low initial price in order to
“penetrate” the market quickly and
deeply.

Can attract a large number of buyers
quickly and win a large market share.

It may be useful if the product will
launch into a new market.

6. Market Penetration Pricing:
To quickly penetrate the
market, the company launches
the product at relatively low
price (P1), expecting to sell
quantity Q1, and generate
revenues equal to P1 times Q1
(the area of the shaded
box). The penetration strategy
capitalizes on the downward
sloping demand curve since the
company can pick the price
and, within some reasonable
bounds, optimize the resulting
short-run sales quantity

7. Market Penetration Pricing:
Example:

8. Product Mix Pricing Strategies:

Product Line Pricing

Optional Product Pricing

Captive Product Pricing

By Product Pricing

Product Bundle Pricing

9. Product Line Pricing:
Involves setting price steps between products in a
product line based on cost differences between
products and customer perceptions of value.

10. Optional Product Pricing
:
Pricing optional or accessory products sold
with the main product (e.g., ice maker with
the refrigerator).

11. Captive Product Pricing:
Pricing products that must be used with the
main product.
For E.g.:

Mobile Phone Battery

Memory Card Chip

Laptop Charger

12. By Product Pricing :
Pricing low-value by-products to get rid of them.
For Example:
Coal tar is a by-Product of the process of
obtaining gas from coal.

13. Product Bundle Pricing:
Pricing bundles of products sold together
(software, monitor, PC, and printer)

14. Price Adjustment Strategies:

Discount and allowance pricing

Segmented pricing

Psychological pricing

Promotional pricing

Geographical pricing

Dynamic pricing

International pricing

15. Price Adjustment Strategies:

Discounts

Allowances

Cash

Trade-in

Quantity

Promotional

Functional

Seasonal

16. Price Adjustment Strategies:

Segmented pricing:


Selling a product or service at two or more
prices, where the difference in prices is not
based on differences in costs.
Types:




Customer-segment
Product-form
Location pricing ( Different Location
Pricing )
Time pricing
different

17. Price Adjustment Strategies:

Psychological pricing:

Considers the psychology of prices and not
simply the economics.

Consumers usually perceive higher-priced
products as having higher quality.

Consumers use price less when they can
judge the quality of a product by
examining it or recalling experiences.

18. Psychological Pricing:

19. Price Adjustment Strategies:

Promotional pricing:


Loss leaders
Special-event pricing

Geographical
pricing:

FOB-origin pricing

Uniform-delivered
pricing

Low-interest financing

Longer warranties

Zone pricing

Free maintenance


Discounts
Basing-point
pricing

Freight-absorption
pricing

20. Price Adjustment Strategies:

Dynamic pricing:


Adjusting prices continually to meet the
characteristics and needs of individual
customers and situations.
International pricing:

Adjusting prices for international markets
requires consideration of many factors.

(For e.g.: Food Industry )

21. Enough for
today. . .