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
Account for customer differences and changing
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
The company makes fewer but
more profitable sales.
Example: Sony high-definition
6. Market-Penetration Pricing
Setting a low price for a new
product in order to attract a large
number of buyers and market
Example: Wal-Mart and and other
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
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
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
19. Segmented Pricing
Selling a product or service at two
or more prices , where differences in
prices is not based on differences in
21. • Different customers pay
different prices for same
product or services.
• Different versions
of the product are
but not according
to differences in
28. • Goods are
placed free on
board a carrier;
pays the freight
from the factory
29. • The company
plus freight to
30. • Company sets
up two or more
a zone pay the
same total price;
the more distant
the zone higher
31. • Seller
city as a basing
from that city to
32. • The seller
absorb all or
part of the
order to get
33. Dynamic Pricing
Adjusting prices continually to meet
the characteristics and needs of
individual customers and situations.
Example: Internet sellers like
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.