Pricing strategies

1.Skimming- setting high prices initially during introduction phase and then gradually
reducing prices .
Apple initially introduced iphone 11 (256 gb) was introduced at 84000 now reduced to
70000

2.Penetration- offering lower prices initially during introduction with the aim of capturing
maximum market share and might raise prices in the long run as competition increases
Xiaomi introduced its smartphones at cheap rates of 10000 with similar features of
various higher priced phones

3.Psychological - Psychological pricing refers to the psychological pricing strategies

marketers use to make customers buy the products, triggered by emotions rather than
logic. Such strategies come in the form of:

Charm Pricing: This involves reducing the price by a minimal amount which makes the
customer perceive the price to be less. For example – the price of a $3 product is set as
$2.99 in supermarkets as customers’ brains process $2.99 to be nearer to $2 and not $3.
Titan watches- all their prices are set at ending 95 customer perceive this to be nearer to
the smaller number

Prestige Pricing: This involves rounding off and setting a higher price for premium and
exclusive products as rounded figures are easily processed and are preferred in such cases.

BOGOF: Buy one, get one free offers trigger the greed among the customers as they get
two products for the price of one. This strategy is often used to clear up the stock or
increase the volume of sales.

Price Anchoring: Anchor is the first price communicated to the customer to make their
mind revolve around that price and buy the product the retailer wants. For example –
printing double price label showing a regular price and a sale price, keeping a higher
priced and medium quality product along with a lower priced but good quality product to
increase its sale, etc.

4.Product line pricing- different prices for different offerings in the same product line
.Takes into account the cost differences in various products, the perceived value of each
product and aims to maximise overall product line profit.
HUL – Sunsilk-200 ml around 120 and dove. / TIGI and Tony&Guy-250 ml sold for 1200

Bata – Power- 800 to 1000 range and Hush puppies-3000 to 4000 range for men sandals
5.Optional product pricing-Add or charge extra for accessories or added amenities to the
base price
Air Asia initially allowed only one baggage -5kg and charged extra for any additional
luggage
Air India charges extra for seats with better leg space

6.Captive product pricing- Low price for core product but usually charges higher prices for
captive products
Gillette mach 3 – 290
Blades pack of 4 – 499

7.By product pricing-selling by products that are difficult/expensive to dispose off

8.Bundle pricing- selling package of products at a lower rate than what the customer
would usually pay if they were to buy the products individually

Mcdonals meals
Mcveggie burger 109
Fries 60/98
Coke 87
Meal- 244
50 saving

9.Customer segment pricing- charging different prices for the same product to different
customer segments
Imagica water park
Adults -999
Students-750

10.Everyday low pricing

Low prices are set and maintained on a daily basis rather than occasionally reducing prices
during sale. Aim is to gain through volume sales
Big Bazaar offers products at a cheaper rate than most other stores on a regular basis

11.High low pricing

Firm initially sets a high price and the reduces prices through promotions, markdowns or
clearance sales
Zara has annual clearance and Christmas sale where products are sold at almost 50% off

12.Premium pricing- pricing your product higher than immediate competition .Cultivate a
sense of higher quality , premium product
Luxury brands

13.Percieved value pricing- based on buyers image , customer support ,reputation ,

quality , channel delivery . Company must deliver value promised and customer must
perceive
Uber different prices for sedan, suv’s compared to hatchbacks
14.Dynamic pricing- adjusting the prices of products continuously to meet needs of the
individual customers
Make my trip adjust prices according to current demand

15.Economy pricing- prices goods low and gains revenue based on the volume, bare
minimum to make a small profit
Generic medicines vs branded

16.Geographic pricing – adjusting prices based on the location of the buyer

Harley bikes are expensive in India due to taxes , tariff rates

17.Going rate pricing

Bases prices largely on competitors prices . Follow the leader-charge same , more or less
Usually for identical product
Commodities , Petrol

18.Auction
English auction – one seller many buyers , bidders raises bid until top price is reached
Ebay

19.Cost plus pricing

20.Target Return pricing