Different types of pricing strategies used

1. PRICING STRATEGIES
Presented By:
VINEETHA N C &
RENJITHA C R

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

4. 1. New Product Pricing
Strategies
 Market-Skimming Pricing
 Market-Penetration Pricing

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

7. 2. Product Mix Pricing
Strategies
Product
Line Pricing
Optional-
Product
Pricing
Captive-
Product
Pricing
By-Product
Pricing
Product
Bundle
Pricing

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.

13. 3. Price-Adjustment
Strategies
 Discount and Allowance Pricing
 Segmented Pricing
 Psychological Pricing
 Promotional Pricing
 Geographical Pricing
 Dynamic Pricing
 International Pricing

14. Discount and Allowance
Reducing prices to reward customer
responses such as paying early or
promoting the product.

15. Discount & Allowance
Pricing
• A straight
reduction in
price on
purchase
during a
stated period
of time.
Discount

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.

20. Segmented Pricing
Customer
Segmente
d
Product
Form
Locatio
n
Pricing
Time
pricing

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

26. Geographical Pricing
Setting prices for customers located
in different parts of the country or
world.

27. FOB-
origin
pricing
Uniform-
delivere
d pricing
Zone
pricing
Basing-
point
pricing
Freight-
absorptio
n pricing

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.

35. Reference
 Principles of marketing – Philip Kotler
& Gary Armstrong – Pearson
Publication

36. THANK YOU