Various type of price strategy

1. Pricing policy and
strategies
BY: Jagdish Raghuvanshi

2. Meaning of Pricing
• Pricing is one of the most important elements of the marketing mix
• Price is the marketing variable that can be changed most quickly
• The price of a product may be seen as a financial expression of the
value of that product.
• The concept of value can therefore be expressed as:
(Perceived) Value = (Perceived) Benefits -(Perceived) Costs

3. List Price – For What customer pays?
Physical good/service
Assurance of quality
Repair facilities
Packaging
Credit
Warranty
Delivery

4. Pricing objectives
Survival
Maximum current profit
Maximum market share
Maximum market skimming
Product-quality leadership

5. Factor affecting pricing
Fixed and variable costs
Competition
Company objectives
Proposed positioning strategies
Target group and willingness to pay

6. Pricing Strategy
Pricing strategy refers to method companies use to price their products
or services.
The price of the products and services are set on the basis their expenses
They add on a certain percentage so they can make a profit.
There are several different pricing strategies to fulfil their objectives

7. Types of pricing strategy
1. Penetration Pricing
2. Skimming Pricing
3. Competition Pricing
4. Economy Pricing
5. Bundle Pricing (Combo)
6. Psychological Pricing

8. Continue
7. Premium Pricing
8. One price policy
9. Discounting Pricing
10. Geographical Pricing
11. Promotional Pricing
12. Product line Pricing

9. Penetration Pricing
Price is set artificially low to gain market share quickly. This is done
when a new product is being launched. It is understood that prices will be
raised once the promotion period is over and market share objectives are
achieved.
Example: Mobile phone rates in India; housing loans etc.

10. Skimming Pricing
High price is charged for a product till such time as competitors allow
after which prices can be dropped. The idea is to recover maximum
money before the product or segment attracts more competitors who
will lower profits for all concerned.
Example: the earliest prices for mobile phones, VCRs and other
electronic items where a few players ruled attracted lower cost Asian
players.

11. Competition Pricing
Also called the strategic pricing. Competitive pricing is a method that
uses the prices set by other businesses (i.e. the competition).
More or less using competitor’s price to price your own products.
Give or take a little percentage to fit what your product or service is
worth.

12. Economy Pricing
No-frills price. Margins are wafer thin; overheads like marketing and
advertising costs are very low. Targets the mass market and high
market share.
Example: Friendly wash detergents; Nirma; local tea producers.

13. Bundle Pricing (Combo)
Businesses use bundle pricing to sell multiple products together for a
lower price than if they were purchased separately. This is an effective
strategy to move unsold items that are simply taking up space.
Bundling also creates the perception in the mind of the consumer that
he's getting a very attractive value for his money.
For example, a restaurant could offer a free dessert with an entree on a
certain day of the week.

14. Psychological Pricing
This is a common pricing technique used by businesses. A minor
difference in prices is a huge difference for customers.
For example, an item whose price is listed as $399.98 may be seen as
much cheaper than a product or service priced at $400.

15. Premium Pricing
High price is used as a defining criterion. Such pricing strategies work
in segments and industries where a strong competitive advantage
exists for the company.
Example: Porsche in cars and Gillette in blades.

16. One price policy
A one price policy is a strategy in which the seller offers the same
price to every customer. In other words, the price does not vary
according to payment method or promotional offers. It is the opposite
of a differential pricing approach or a variable price policy. With a one
price policy, customers cannot negotiate the price. They cannot
negotiate the price because the company won’t allow it.

17. Geographical Pricing
This pricing strategy is one where different prices are charged in
different geographical locations or markets for the exact same product
or service.
For example, instructional materials sold in Canada will be sold at a
cheaper rate in Cameroun due to the disparity in wages, the economy,
etc.

18. Discounting Pricing
A pricing strategy that offers products and services at a reduced price.
Discount prices can come in the form of seasonal discounts, loyalty
rebates, etcetera.

19. Promotional Pricing
It is just like Bundling price. But here, the products are bundled so as
to make the customer use the bundled product for the first time. This
type of pricing focuses on buying one, and getting a new type of
product for free. Promotional pricing can also serve as a way to move
old stock as well as to increase brand awareness.

20. Product line Pricing
The process used by retailers of separating goods into cost categories
in order to create various quality levels in the minds of consumers.
Effective product line pricing by a business will usually involve
putting sufficient price gaps between categories to inform prospective
buyers of quality differentials. Also called price lining.

21. Thank You