Unit 13: The marketing mix: Price
A business can adopt new pricing strategies for several reasons:
- To try to enter into a new market
- To try to increase market share
- To try to increase profit
- To make sure all costs are covered and particular profit is earned
The main methods of pricing
Competitive pricing is when a product is priced by basing on competitor's prices to try to hold more and more of market
Penetration pricing is when a product enter to a new market has a lower price than the competitors' prices
Benefits:
Benefits:
- The product is sold at low price
- It makes sure that the sales are made and the new product enters the market
- The profit may be low
Price skimming is when a new product on the market is sold at high price
Benefits:
Benefits:
- It can make the product become like a thing that has good quality
- It may push off some customers because of the high price
Promotional pricing is when the product is sold at low price for s short period time
Benefits:
Benefits:
- Can sell more the unwanted stock
- Can renew interest
- Sales revenue will be lower
Psychological pricing is when the price is set up to affect what customers think
Benefits:
Benefits:
- High price
- Can set up the price that just below the whole number
- Can make sure the sales are made - increase the brand image
- Lost a little amount of sales revenue
- The competitors may do the same thing
Dynamic pricing is when the price is set up by using the demand of the customers
Benefits:
Benefits:
- Increase sales revenue
- Increase profit
- Make sure all seats are filled, ex: Cinema, Airlines
- High cost of changing price
- High cost for customers in term of time to find the best price