Preview

Pricing Strategies

Powerful Essays
Open Document
Open Document
1131 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Pricing Strategies
http://www.bized.ac.uk

Pricing Strategies

Copyright 2006 – Biz/ed

http://www.bized.ac.uk

Pricing Strategies

Copyright 2006 – Biz/ed

http://www.bized.ac.uk

Penetration Pricing

Copyright 2006 – Biz/ed

http://www.bized.ac.uk

Penetration Pricing
• Price set to ‘penetrate the market’
• ‘Low’ price to secure high volumes
• Typical in mass market products – chocolate bars, food stuffs, household goods, etc.
• Suitable for products with long anticipated life cycles
• May be useful if launching into a new market Copyright 2006 – Biz/ed

http://www.bized.ac.uk

Market Skimming

Copyright 2006 – Biz/ed

http://www.bized.ac.uk

Market Skimming

Many are predicting a firesale in laptops as supply exceeds demand. • High price, Low volumes
• Skim the profit from the market • Suitable for products that have short life cycles or which will face competition at some point in the future (e.g. after a patent runs out)
• Examples include:
Playstation, jewellery, digital technology, new
DVDs, etc.

Copyright: iStock.com

Copyright 2006 – Biz/ed

http://www.bized.ac.uk

Value Pricing

Copyright 2006 – Biz/ed

http://www.bized.ac.uk

Value Pricing
• Price set in accordance with customer perceptions about the value of the product/service • Examples include status products/exclusive products Companies may be able to set prices according to perceived value.
Copyright: iStock.com

Copyright 2006 – Biz/ed

http://www.bized.ac.uk

Loss Leader

Copyright 2006 – Biz/ed

http://www.bized.ac.uk

Loss Leader
• Goods/services deliberately sold below cost to encourage sales elsewhere
• Typical in supermarkets, e.g. at
Christmas, selling bottles of gin at £3 in the hope that people will be attracted to the store and buy other things
• Purchases of other items more than covers ‘loss’ on item sold
• e.g. ‘Free’ mobile phone when taking on contract package
Copyright 2006 –
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Good Essays

    MKT 571 week 4 team d
    • 692 Words
    • 3 Pages

    MKT 571 week 4 team d

    Determining the right price is just one aspect of effective pricing. In order to implement a successful launch, analysis needs to be completed on the market share, demographics, sector and affordability. Any product will undergo competitive pressure sooner or later in the life cycle. Risk analysis should be done and mitigated before a product being launched in domestic or international market. Forecast for the demand is another key factor to be considered before making any pricing decisions.…

    • 692 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Marketing Simulation
    • 275 Words
    • 2 Pages

    Marketing Simulation

    Determining pricing strategies is critical to a firm’s success because price has a direct effect on a firm’s profits (Kerin, et al., 2008). Because of the importance of finding an appropriate price, an ‘approximate price level’ was determined. In determining this price, an integrated demand-competition orientated approach was decided upon, emphasising consumer preferences above factors such as cost, while stressing competitor’s pricing (Kerin, et al., 2008). Furthermore, the penetration pricing strategy was used as a basis for entering the market.…

    • 275 Words
    • 2 Pages
    Good Essays
    Read More
  • Better Essays

    Pricing and Distribution Strategies
    • 827 Words
    • 4 Pages

    Pricing and Distribution Strategies

    At this time, Taylor Trucking has established contracts with various manufacturers in the regional area. The industry standard of pricing based on miles per thousand pounds of product will continue in this company for the rates charged for shipments. The customer will also be responsible for any fuel surcharge that will be based on miles travelled. Taylor Trucking’s low overhead will be the competitive advantage for the customer. A general pricing guide is below that indicates the basic charges for shipments. Additional services such as loading, unloading, refrigeration, use of compressors and/or pumps, and hoses will add additional freight charges. Loading, unloading, or waiting for freight to be heated, will be charged at a rate of $25/hour after the first one and one half hours. A typical local shipping example is given at the bottom of this chart.…

    • 827 Words
    • 4 Pages
    Better Essays
    Read More
  • Good Essays

    Case study 3 pricing and performance
    • 522 Words
    • 6 Pages

    Case study 3 pricing and performance

    Question 1: From the given last two years sales figure, it is showing an average of 4% price is increased in every boat. Based on last 2 years pricing pattern and the condition attached with B16 & B35.Before considering the price of B33, Billing Boats AS has to think about the challenge of B29 and market popularity both of these two boats .After considering all these factors the manufacturer’s selling price for the next year can be followed by:…

    • 522 Words
    • 6 Pages
    Good Essays
    Read More
  • Powerful Essays

    Dot.Com Bubble
    • 1799 Words
    • 8 Pages

    Dot.Com Bubble

    This article explains the relationship between intangible assets (advertising and R&D) expenditures and internet firms’ market value during 1996-2000.The author presents two opinions in regard to internet stock’s valuation. The first theory is based on DCF methodology and asserts that due to poor earnings and low earnings visibility, internet stocks were irrationally overvalued in 1999. Secondly, based on the option pricing theory, it can be justified that the prices were warranted due to growth of those firms and volatility as primary value drivers. The article details five literature reviews on valuation – (1) Investment opportunity approach to valuation and more especially growth firms, (2) The life cycle theory, (3) The effects of intangible assets (R&D and advertisement) to market value, and (4) Valuation of internet firms using real options.…

    • 1799 Words
    • 8 Pages
    Powerful Essays
    Read More
  • Good Essays

    Pricing Strategy and Distribution
    • 1262 Words
    • 6 Pages

    Pricing Strategy and Distribution

    Nature Beauty Price strategy will be the penetration theory for my product. Penetration is pricing low to stimulate the sales, encourage trail, and trigger by word of mouth. Nature Beauty’s mineral powder foundation will not be a new product that no company has similar to. We will need to start by gaining the trust of the consumers by word of mouth and different marketing strategies to the targeted customers. This way once the product has some buzz and customers appreciate the products value, we can price the mineral powder foundation at higher price do to the demand of the product. The competing cosmetic company has a similar product that claims help the skin improve. This company will be established in the cosmetic industry and customers will have trust in them. We at Nature Beauty are striving to become a powerhouse cosmetic line so we can price according the value we believe we hold. Penetration strategy is the best the company because there are a lot of other producst that compliments the mineral powder foundation and other general everyday hygiene use type of products that want to bring out. With this strategy we can price the other products low as well and hopefully with the trust of Nature Beauty mineral powder foundation gains it will help us introduce them. Even though Nature Beauty can be considered a luxury cosmetic, we also want it to become a necessity to the consumers as well. We want the demand for it increases by making the consumers feel like this product is a need and want them to live by this Brand.…

    • 1262 Words
    • 6 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Competitive Pricing Strategy
    • 257 Words
    • 1 Page

    Competitive Pricing Strategy

    As you market yourself to employers, the salary you demand is essentially your personal price. Keeping that in mind, what pricing strategy should you follow (penetration, skimming, or competitive)? Why? Issues to consider:…

    • 257 Words
    • 1 Page
    Satisfactory Essays
    Read More
  • Better Essays

    Pricing Strategy and Channel Distribution
    • 1461 Words
    • 6 Pages

    Pricing Strategy and Channel Distribution

    References: Iacobucci, Dawn (2009). Marketing Management: 2010 custom edition (12th ed.). Mason, OH: South-Western Cengage Learning.…

    • 1461 Words
    • 6 Pages
    Better Essays
    Read More
  • Powerful Essays

    Harvard Pricing Simulation Report
    • 1342 Words
    • 6 Pages

    Harvard Pricing Simulation Report

    Comparing the 3 cities, we have identified Orlando as the biggest market followed by Miami with Tampa being the smallest market. Our fleet is distributed in accordance with market size.…

    • 1342 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Pricing Strategy in Video Game Industry
    • 1239 Words
    • 5 Pages

    Pricing Strategy in Video Game Industry

    Video Gaming industry has gone dramatic changes when more and more digital platforms emerge and improved technology in portable devices, mainly in social games(Facebook, Myspace) and mobile games. 27% of US online population play at least one game on social network, and Facebook gaming revenue hit $1.32 billion in U.S market in 20111. Also, as more than more people have smart phone especially apple’s iOS devices, gaming application becomes more and more popular in mobile market(72% game applications on iTune)2.…

    • 1239 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Pricing Strategy
    • 401 Words
    • 2 Pages

    Pricing Strategy

    First-degree price discrimination: Charging different prices to segments according to their price elasticity or sensitivity.…

    • 401 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Pricing Strategy
    • 1054 Words
    • 5 Pages

    Pricing Strategy

    The pricing strategy for Crystal Light Kicks will eventually be in line with current pricing of other Crystal Light products as the Crystal Light brand is already in existence. Current Crystal Light pricing is at a suggested retail price of $2.56 oz for a 1.4 oz package ($3.54) that includes 10 on the go packets and $1.25 oz for a 3.2 oz canister which can make a 12 quart pitcher ($4.00) according to Pea Pod by Giant supermarket (Peapod.com). The initial pricing strategy for Crystal Light Kicks will take a penetration pricing strategy to introduce the product to assist in dispersing the brand quickly and widely throughout the new market segment. Since the target market is children ages 5-16, the strategy is to employ parents who drink the existing Crystal Light product to purchase the product for their children. Crystal Light Kicks will offer its new product at a suggested retail price of $2.31 oz for the same size package as the regular 10 count on the go packets ($3.23). For the canisters, Crystal Light will take on a true penetration pricing strategy by offering the 10 oz canister for $.50 oz and will be sold at the same supermarkets offering the existing product line. Kraft Brands and Crystal Light will take the penetration approach to help capture a large segment of their target market (children ages 5-16). Since the product line will include round shaped canisters with a scooper to stay in line with other products marketed to children like Kool-Aid it will be important to remain competitive with their pricing. According to Pea Pod by Giant supermarket, Kook Aid 19 oz cans are priced at $0.18 an oz coming out to $3.42. Kool Aid may offer a larger size canister but Crystal Light requires less scoopes to make a pitcher. Skimming is not an option for the new Crystal Light Kicks brand as…

    • 1054 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Global Business Today Case Discussion Questions Answers
    • 1460 Words
    • 9 Pages

    Global Business Today Case Discussion Questions Answers

    Until the last decade or two of the twentieth century it was common for Global Business Today…

    • 1460 Words
    • 9 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Depreciation Replacement Cost Method
    • 11250 Words
    • 45 Pages

    Depreciation Replacement Cost Method

    Acknowledgements RICS would like to thank Kingston University School of Surveying for their help in preparation of this Paper. Extracts from the ‘International Valuation Standards 2007’ are reproduced in this publication with the permission of the International Valuations Standards Committee which holds the copyright. This Valuation Information Paper is effective from 1 July 2007.…

    • 11250 Words
    • 45 Pages
    Powerful Essays
    Read More
  • Best Essays

    Air Namibia
    • 3253 Words
    • 14 Pages

    Air Namibia

    Price can be affected by a number of factors such as organisational factors, customer factors and market factors (Rowley, 1997)…

    • 3253 Words
    • 14 Pages
    Best Essays
    Read More

Related Topics