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Pricing Strategies

Presented To:
Ma’am Zara Imran
Presented by:
Jeremiah Gill (L-1094)
Ibrahim Ejaz (L-1093)
1- Penetration Pricing
 Charging lowest price for the new product. Or offer a
product at very low price. It is also called stay-out
policy.
 Aim to:
1. Gain market share quickly.
2. Build customer usage and loyalty.
3. To increase sale in market.
4. To attract large number of buyers.
5. Long-term profitability.
Graph:

 When the price of the product is low, the demand of the product
is high. And this is the aim of the company to capture market and
then they increase their products price.
Conditions:
To adopt penetration strategy, there are some
conditions:
1. High elasticity of demand.
2. Cost saving.
3. Best quality product.
4. Potential threat to competitors.
Examples:
1) PTCL Student Package
2) Gillette
3) Android
4) Starbucks
5) Netflix
2- Skimming Pricing
 Charging the high price for the new product. It is
opposite to penetration pricing. It is for a short-term
period. After sometime, price can be reduce.
 Aim to:
1. Set high price to maximize profit.
2. Buyers must want the product at the price.
3. Quick recovery of development cost.
Segments:
To select the price of the product, we have to divide the
market into two different segments:
1. Where price elasticity of our product is high, the
price of the product will be low.
2. Where price elasticity of our product is low, we can
make the price of the product high.

Conditions:
3. Price elasticity should be low.
4. Check segments according to product elasticity.
5. Flotation of product.
6. Take care of the cost.
7. Research and development.
Examples:
1. Apple
2. Sony
3. Designer clothing
4. Automobile industry
5. Luxurious
3- Economy Pricing
 In this strategy, the company’s main focus is
to decrease the production cost and low price
is set for the product to attract the price
conscious consumers.
 Overheads like marketing and advertising

costs are very low.


 Targets the mass market and high market

share.
Examples:
1. Nirma washing powder.
2. Lipton.
3. Dove.
4. Spaghetti
4- Psychological Pricing
 Prices are expressed in a way that attracts more to the
consumer OR the prices lower than a whole number.
 Its aim is to attract the customers emotional side.

 There are two forms of psychological pricing:


1. Charm pricing
2. Prestige pricing
1- Charming pricing:
 Reducing left digit by one. It is a popular strategy that the
retailers use all over the world. For example, instead of
selling a shirt for 1500 rupees, we set the price at 1499.

2- Prestige pricing:
 Setting prices higher than normal because lower price will
have a negative impact on sale. For example, company’s
like Rolex, Nike etc. sell their products at higher price
because people associates their products with quality.
Examples:
1. KFC
2. Outfitters
3. J.
4. Mobile phones
5. Laptops
5- Bundle Pricing
 Set of goods or services are sold at a lower price than they
would charge if the customer bought all of them separately.
 It increases a profit by giving discount to the customer.

 Examples:
1. Colgate
2. Pantene
3. McDonald’s
4. Cable television channels
5. Microsoft 365
6- Premium Pricing
 Setting the price of the product higher than
the similar competition OR artificially
maintaining a high price for a product. It is
similar to skimming pricing strategy.
 This strategy is used to maximize profit in

areas where customers are happy to pay


more and there are no substitutes for the
product.
 High quality products.
Examples:
1. Hotels and restaurants like PC.
2. Rolex
3. Gucci
4. Cartier
5. Bentley
7- Geographical Pricing

 The price of the product is decided on the basis of the location


where the product is being sold.
 Its aim is to gain maximum revenue in the market.
 There are 5 types of geographical pricing:
1. FOB Pricing
2. Uniformed Delivery Pricing
3. Zone Pricing
4. Basing Point Pricing
5. Freight Absorption Pricing.
1- FOB(free on board) Pricing:
 It means that the goods are delivered free on board a carrier. And

responsibilities are passes to the customers.


2- Uniformed Delivery Pricing:
 It means the company charges the same price and freight to all

customers, regardless of location.


3- Zone Pricing:
 It uses two or more zones rather than regions to differentiate between

the pricing offered.


4- Basing Point Pricing:
 Seller selects a given city as a ‘basing point’ and charges all customers

the freight cost associated from that city to the customers location.
5- Freight Absorption Pricing:
 Seller absorbs part of the actual freight charge as an incentive to attract

business in competitive market.


Examples:
1. Attock fuelling station
2. TCS
3. Leopards Courier
4. Ali Baba
5. Daraz
8- Promotional Pricing
 Prices are temporarily priced below list price or cost to
increase demand. Promotional strategies that may be used
includes:
1. Direct discount
2. Bulk discounts and variants
3. Price matching
4. Vouchers
5. Loyalty points
 There are six types of promotional pricing :

1) Special event pricing:


Companies offer discounts on festivals, during the off-seasons
with the intention to pull as many customers as possible.
2) Cash Rebates:
The consumer goods companies offers the cash rebates on their
items if purchased in a particular time period.
3) Low-interest pricing:
It is used to boost the sale of the product.
4) Warranties and service contracts:
The company’s offer the extended warranties and free services of
the product to the customer.
5) Psychological discounting:
The company’s artificially set the high price of the product and then
offer it as substantial savings.
6) Loss-Leader Pricing:
Big retailers or supermarkets reduce the price of a well-known
brand with the intention to have an additional store traffic.
Examples:
1. KFC
2. Outfitters
3. Khaadi
4. Tackle Direct, sells fishing gear.
5. Sapphire
9- Value Pricing
 It means that the marketer cannot design a product and
marketing program and then set the price.
 It offers the right combination of quality and good service to
justify price.
 Examples:
1. Apple
2. Starbucks
3. Louis Vuitton
4. The Diamond Industry
10- Captive Pricing
 When the producer keep its products price low and supporting
products price kept high.
 Products that are used along with the main product.

Examples:
1. Razor and blades
2. Printers and ink cartridges
3. Smartphones and wireless plans
4. Car and petrol
5. Pen and ink
Thank
You!

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