2. Pricing Strategies
The pricing decisions management
makes to fit the changing
competitive situations met by specific
product are its pricing strategies.
The pricing strategies are specific
and for short periods
3. Pricing strategies available
to marketers
Price-adjustment Strategies
Account for customer differences and changing
situation.
Product mix pricing strategies
For related products in the product mix
New-Product Pricing strategies
Introductory stages of a product life cycle
5. Market Skimming Pricing
Setting a high price for a new
products to skim maximum
revenue.
The company makes fewer but
more profitable sales.
Example: Sony high-definition
televison
6. Market-Penetration Pricing
Setting a low price for a new
product in order to attract a large
number of buyers and market
share.
Example: Wal-Mart and and other
discount retailers
Dell used this strategy to enter the
personal computer market
8. Product Line pricing
Setting the price steps between
various products in a product line,
based on cost differences
between the products, customer
evaluation of different features, and
competitors prices.
Example: Gramophone sells high
quality sound system, ranging in
price from $5000 to $120000.
9. Optional-Product Pricing
The pricing of optional or
accessory products along with
a main product.
Example: Refrigerators come
with optional ice makers.
10. Captive-Product Pricing
Setting a price for products
that must be used along with a
main product, such as blades for
a razor and film for a camera.
In the case of services , this
strategy is called two-part
pricing. The prices of service is
broken in to a fixed fee plus a
variable usage rate.
11. By-Product pricing
Setting a price for by-product in
order to make the main product’s
price more competitive.
Example: paper maker
MeadWestvaco has turned what
was considers chemical waste in
to profit-making products.
12. Product Bundle Pricing
Combining several products
and offering the bundle at a
reduced price.
Example: Fast food restaurants
bundle a burger, fries, and a soft
drink at a combo price.
16. Types of discounts
Cash Discount: price reduction to
buyers who pay their bills promptly.
Seasonal Discount: price reduction to
buyers who purchase merchandise or
services out of season.
Trade discount: also known functional
discount allowed in the form of
deduction from the list price.
17. Quantity Discount: price reduction
to buyers who buy large
volumes.Such discount provide an
incentive to the customers to buy
more from one given seller.
18. • Promotional
money paid by
manufactures
to retailers.
E.g.: free
samples,
advertisement
allowances
,window display
allowances etc..
Allowance
19. Segmented Pricing
Selling a product or service at two
or more prices , where differences in
prices is not based on differences in
costs.
21. • Different customers pay
different prices for same
product or services.
Customer
Segmente
d pricing
• Different versions
of the product are
priced differently
but not according
to differences in
their cost
Product
form
pricing
22. • Company charges
different prices
for different
location.
Location
pricing
• Firm varies its
price by the
season.
Time
Pricing
23. Psychological Pricing
A pricing approach that considers the
psychology of prices and not simply
the economics; the price is used to
say something about the product.
24. Reference prices
One of the aspect of psychological
pricing.
Prices that buyers carry in their
minds and refer to when looking at
a given product.
25. Promotional Pricing
Companies will temporarily price their
products below the list price and
sometimes even below cost, to
increase short-run sales.
Example: Super Market and
department stores
28. • Goods are
placed free on
board a carrier;
the customer
pays the freight
from the factory
to the
destination
FOB-origin
pricing
29. • The company
charges the
same price
plus freight to
all customers,
regardless of
their location.
Uniform-
delivered
pricing
30. • Company sets
up two or more
zones. All
customers within
a zone pay the
same total price;
the more distant
the zone higher
the price.
Zone
pricing
31. • Seller
designate some
city as a basing
point and
charges all
customers the
freight cost
from that city to
the customer.
Basing-
point
pricing
32. • The seller
absorb all or
part of the
freight
charges in
order to get
desired
business.
Freight-
absorption
pricing
33. Dynamic Pricing
Adjusting prices continually to meet
the characteristics and needs of
individual customers and situations.
Example: Internet sellers like
Amazon.com
Dell use this strategy to achieve a real
time balancing of supply and demand
for computer components.
34. International Pricing
Companies that market their
product internationally must decide
what prices to charge in different
countries in which they operate.
In some cases company can set
uniform worldwide price.
Example: Boeing sell its jetliners at
about the same price everywhere.