PRICING STRATEGIES

BY:- DIVYA KERKETTA

2 ND SEMESTER

Pricing Objectives
Pricing objectives are overall goals that describe the the role of price in an organisations long range plans. Some major types are as follows: Survival Profit maximisation Return on investment Product quality

Pricing Strategy

Pricing strategy is the method which

companies use to price their products and services. Pricing strategy refers to an approach or a course of action designed to achieve pricing objectives.

Types of Pricing Strategies

Penetrating pricing strategy

Skimming pricing strategy

Economy pricing strategy Premium pricing strategy

Competition- Based pricing strategy

Psychological pricing strategy Geographical pricing strategy

Product line pricing strategy

Penetrating Pricing Strategy

The organisation sets a low price for

their product in order to gain market share. This strategy is based upon the object of maximising profit through maximum sales with low margin of profit.

Skimming Pricing Strategy

The organisation sets a very high

price at initial stage for their products, then lowers the price over time. It allows the firm to recover its production cost before competition steps in and lowers the market price.

Economy Pricing strategy

It is a low cost pricing strategy where

the costs of marketing and promoting a product are kept to a minimum. This strategy is mostly used for those products which are of inferior quality.

Premium Pricing Strategy

This strategy is employed when the product you are selling is unique and of very high quality, but you only expect to sell a small amount. Buyers of such products typically view them as luxury goods.

Competition- Based Pricing Strategy

Here the organisation sets a price in

comparison with its competitors. The firm can fix the price: Below competitive level Above competitive level At the same level

Psychological Pricing Strategy

The manufacturer fix the prices of

their product in such a manner that it may create an impression in the mind of consumers that the prices are low.

Geographical Pricing Strategy

Fixing the price on the basis of

geographical location. In this strategy transportation cost of goods is taken into account. It may be: Zonal pricing strategy Uniform pricing strategy

Product line Pricing Strategy

This strategy is used to sell different

products in the same product range at different prices on the basis of features and benefits.

Conclusion Before choosing a pricing objective and a related strategy the company requires to carefully consider their business and financial goals, the state of the market (including its past and future), and the products and prices of their competitors (and possibly their business goals).

Reference
Marketing Teacher, Ltd. Pricing

Strategies. http://www.marketingteacher.com/Lesso ns/lesson_pricing.htm. NetMBA. 2005. Pricing Strategy. http://www.netmba.com/marketing/pricin g/.