2. Pricing Strategies:-
Pricing is the process of determining what
company will receive in exchange for its
products or services.
Maximizing Profitability.
Capturing Large Market &
Creating barriers for new entries.
3. Types of Pricing Strategies-
Price Skimming
Penetration Pricing
Full Cost Pricing
Product Line Pricing
4. Skimming Pricing-
SP is Product pricing strategy by which a
firm charge the highest initial price that
customer will pay.
‘Skim the profit’ from market
High price, Low volumes
Suitable for short life cycle’s products
E.g. Digital technology(Mobiles) New DVDs
etc.
5. Penetration Pricing-
PP is the practice of offering low price for a new
product or service.
Low price to secure high volumes
Price set to ‘penetrate the market’
Suitable for long anticipated life cycle’s
products
Typical in Mass market products –Chocolate
bars, food stuffs etc.
Useful for launching new products.
6. Full Cost Pricing-
FCP is practice where the price of a product
is calculated by a firm on the basis of its direct
costs per unit of output to create profit margin.
Mainly used by manufacturing Firms.
Includes: Fixed Cost, variable cost, Selling
Cost & advertisement cost + PROFIT
Also known as Absorption Cost Pricing.
7. Product Line Pricing-
PLP is process used by retailers of
seprating goods into cost categories in order to
create various quality levels in the minds of
consumers.
Price setting For Multiple Products
To consider customers’ income and taste
Mainly used in Tourism sector or household
goods
