Question

Identify & Explain the key concepts and of a pricing strategy?

Answer 1

Key concepts of pricing strategy are explained along with the examples: -

Premium Pricing: - High prices is fixed for the products from the starting and it is followed till the end in order to maintain exclusivity of the product. Companies through premium pricing tries to create the product scarcity image in the mind of the potential customers. They spend a lot on marketing campaigns in which they always focus on their premium quality and exclusivity of their products. For example, BMW, Audi cars.

Penetration pricing: - In this low price is offered from the starting in order to capture market share in particular segment. Such low prices are offered which does not let any new entry in that particular segment as well as effects the current players in that particular segment for example:- Reliance jio which offered free internet and call services to its users in order to capture market share in telecom sector which has effected the other players like Vodafone, airtel a lot. Now jio is charging prices for each of it packs but has kept the prices reasonable and is now earning millions of revenues by using such pricing strategy.

Economy pricing: -   In this price are low because marketing cost and promotional cost involved is very low, so they offer lesser prices to consumer on their products. Mass market is targeted through this type of pricing such as detergents like Nirma, and grocery chain Walmart which follows everyday low pricing to its customers though economical pricing.

Skimming Prices: - In starting prices are kept high but with the demand and change in competitors pricing, prices are made low. Main aim was to earn high profit in the started and as the demand of the product starts falling prices are putted down so that clearance of stock can be done. This type of pricing strategy is followed by Mobile companies like Vivo, One plus, Oppo.