Price strategy

Author: Dele Anthony Bodumde (Student. Msc International Marketing. The Claude Littner Business School. University of West London)

There are various ways companies determine price of their products/services, however it can be debated, ‘which supposed to come first product or price’.

In either cases price is still a versatile element in marketing mix. There are four major strategies commonly used by company to determine price of their product\service. Below is the summery of pricing strategies matrix.

·   Penetration pricing- In summary it means low price high quality product, this help to facilitate easy awareness of the product to the  consumers and also easy entry into the market to generate  a large market share, example are insurance and telecommunication companies

·   Economy pricing allows product to be produce at low price so as to be able to get it into market at low price (low price mean low quality) in any case the product still fulfil the need of the consumers. This is more common among supermarket with a lot of economy brands been displace on their shelf, example Aldi

·        Price skimming- product is given an high price despite the product might be of low quality, reason is because the company has a higher competitive advantage, this strategy tend to attract competitors thereby driving the price of that product to fall due to increase in supplies.

·        Psychological pricing- this pricing strategies works well with every product but not really sure it fit quit well into service providers (point of discursion) this is clear strategy that take into considerations of psychology of pricing by using price point perspective, such as a product is price as £.99 not £1.

·        Premium price is mostly associated with unique brands, high quality high price, most company with high competitive advantage and feel safe in the market, Uses premium price for their product. Example is Apple.

However that does not means there are no other very important pricing strategies, such as

·        Product line pricing

·        Optional pricing

·        Captive product pricing

·        Product bundle pricing

·        Promotional pricing

·        Geographical pricing

·        Value pricing this mostly used by fast food restaurant eg McDonalds etc. with the almighty value meals

Source -http://www.marketingteacher.com/pricing-strategies/