Pricing Strategies

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PRICING STRATEGIES IN MARKETING Almost every business needs to put extra efforts on creating appropriate pricing strategy that helps them in sustaining in the marketplace. Creating pricing strategy is considered as a crucial part of both business plan and day to day business operations. The whole success of a business is dependent on how effectively this strategy is designed. Prices are not only important from selling point of view but also customers perceive the offerings in comparison with the price to determine its value. Usually businesses conduct detailed research before creating a pricing strategy and closely analyze the pricing strategy followed by their competitors. Below are some of the pricing strategies that businesses opt for their products and services.

Premium Pricing: In premium pricing strategies the prices of offerings are relatively higher than the prices of competitors.

This strategy is followed by businesses only when they have something unique to offer for customers which no other company is providing. Also implement this strategy when the product is new in the marketplace and businesses have competitive advantage over others. This strategy has been benefiting companies those are entering into new market with an intention of maximizing their revenue.

Penetration Pricing: One of the most effective pricing strategy that many businesses follow is penetration pricing. Usually companies use this strategy when they are entering into new market and want to attract customers by offering relatively low price than the competitors. Initially, businesses may experience losses due to lowering prices but it provides an added advantage of positive word of mouth along with the hope of awareness among the target audiences.

Economy Pricing: The most common strategy for pricing is economy pricing which is practiced by quite famous brand WalMart. Mostly brands available in Wal-Mart are based on this strategy. Companies following this policy adopt low cost marketing approach and target those customers who are extremely price sensitive.

Price Skimming: Price skimming is another type pf pricing strategy in which company sets relatively high process of products and services offered in the market to reap maximum benefits in the initial stage. Later the company reduces the prices of its product over time.

Psychological Pricing: Psychological pricing is highly creative form of pricing strategy that most of the marketers’ use to attract customers. For example a product is offered for $99 which the customer perceives less as compared to the product offered for $100. Although it does not seem to be a major distinction but it has significant impact on the psychology of customers.

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Sale pricing: Sale pricing is followed when the company wants to clear their stock in order to move in new seasonal merchandise irrespective of the original price of the products. Most of the time, this approach is used by marketers when the last batch of seasonal goods are not sold out.

Reference: http://www.researchomatic.com/New-Research/Pricing-Evaluation-585842.html

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