This document discusses pricing strategy and provides an overview of pricing concepts and approaches. It defines price and pricing, and lists 10 factors that influence pricing decisions. It then outlines 10 common pricing strategies, including penetration pricing, price skimming, premium pricing, economy pricing, odd pricing, prestige pricing, geographic pricing, price lining, dual pricing, and sealed bid/competitive bid pricing. The strategies aim to maximize profits and market share by setting prices based on objectives, costs, competition, and other market factors.

1. Pricing Strategy
Prepared by,
Pawan Kumar Gupta,
Assistant Professor, Department of Commerce,
MGGAC, MAHE

2. What is price?
“Price is the amount of money or goods for
which a thing is bought or sold”. The price of a
product may be seen as a financial expression of the value
of that product. For a consumer, price is the monetary
expression of the value to be enjoyed/benefits of
purchasing a product, as compared with other available
items.

3. What is pricing?
Pricing is the process of determination of suitable
price of a product. Pricing refers to the decision-making
process that goes into establishing a value for a product or
service. There are many different strategies that a business
can use when setting prices, but they are all a form of
pricing. The price that's set during the pricing process is
what the customer will pay for that product or service.

4. Factors influencing pricing decisions
1- Objectives
2- Cost of product
3- Demand and supply
4- Competition
5- Distribution channel
6- ROI
7- Availability of Raw materials
8- Trade barriers
9- Purchasing power of customer
10- R&D
11- Legal aspects, etc.

5. Pricing strategy
There are many ways to price a product. A firm may
choose various kinds of pricing of their products. These are
main pricing strategies.
1- Penetration Pricing: The price charged for products
and services is set artificially low in order to gain market
share. Once this is achieved, the price is increased. This
approach was used by Sky TV, Tele communication
companies.

6. 2- Price Skimming: Charge a high price because you
have a substantial competitive advantage. However, the
advantage is not sustainable. The high price tends to attract
new competitors into the market, and the price inevitably
falls due to increased supply. Manufacturers of digital
watches used a skimming approach in the 1970s. Once
other manufacturers were tempted into the market and the
watches were produced at a lower unit cost, other
marketing strategies and pricing approaches are
implemented.

7. 3- Premium Pricing: Use a high price where there is
uniqueness about the product or service. This approach is
used where a substantial competitive advantage exists.
Premium pricing is a mix of “What the traffic will bear” &
“Value for money.” Marketer presents superior quality of
product with the best quality & unique features. For
example- Cosmetic & toiletries market,

8. 4- Economy Pricing: This is a no frills low price. The cost
of marketing and manufacture are kept at a minimum.
Supermarkets often have economy brands for soups,
spaghetti, etc.
5- Odd pricing: Odd pricing may be a price ending in an
odd number or a price just under a round number. This
pricing strategy is generally adopted by seller of convenience
products. For example- A product priced at Rs. 99.95 will
have more sales than when it is priced at Rs. 100. Under odd
pricing buyers may feel that it is “Mark down price.”

9. 6- Prestige pricing: Prestige pricing is one that is fixed
by at a higher price than the producer’s near substitute.
Prestige pricing is adopted because many customers feel
that “High price, high quality.”
7- Geographic pricing: The distance between buyer &
seller is considered in geographical pricing. When there is a
lot of distance between the production centre &
consumption centre, marketer can adopt different prices in
each area without any problem.

10. 8- Price lining: Price lining is found more commonly
among retailers than among wholesalers or
producers. It is the strategy of setting pricing levels
for a given class or line of goods. For example- A
buyer of shirt can go into shop where shirts are
retailed between Rs. 300 to 500, Rs. 501 to 1000,
Rs.1001 to 2000,...........etc.

11. 9- Dual pricing: When a manufacturer sales the same
product at two different prices, it is dual price strategy.
Under this strategy, producer is required compulsory to sell
a part of production to the government or its authorised
agency at substantially low price. For example- Sugar
10- Sealed bid/ Competitive bid: This pricing strategy
is followed in the case of specific job work or contract.

12. Thank you