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Understand Pricing Strategy in Marketing
Pricing strategy means modifying prices as per market determinants. It is crucial in marketing because it creates a perception of a product that differentiates a business from its competitors. A pricing strategy takes into account factors like market conditions, customers' willingness to pay, competition, trade margins, and expenses incurred.
Apart from deciding the identity of a brand, pricing also determines the profits that an organization earns. An effective pricing strategy is the outcome of meticulous market research and competitor analysis. If solving tricky questions on this subject feels challenging to you, seek expert online pricing strategy assignment help. We will help you design an impeccable pricing strategy for any product.
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How to Price a New Product?
Many management professionals feel confused over pricing a new product. The pricing policy you set must be as per the dynamic nature of the product’s competitive condition. New products have a uniqueness that is bound to degenerate progressively with a rise in competition.
Throughout the product cycle, changes keep happening in promotional, price elasticity, production, and distribution costs. These changes demand changes in the pricing policy. So, the right pricing depends on the technical maturity, market maturity, and competitive maturity of the product.
Technical maturity is denoted by a lower rate of product development and more stability in production processes. Market maturity can be seen in people’s acceptance of the service idea but a belief that the items of many producers will have satisfactory performance. Competitive maturity is revealed by the rising stability of price structures and market shares.
Five Kinds of Pricing Strategy Examples
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Cost Or Plus pricing Or MarkUp Pricing- it ties together all the costs contributing for the item to be sold with a definite percentage added to the item’s subtotal.
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Competition Based Pricing Strategy- This strategy uses the pricing information of competitors for similar items. This is for determining a base price for their items.
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Competitive Pricing - In this type of strategy, you take in-depth research on what your competitors are doing with regards to their prices. After that, you keep making suitable adjustments to make customers choose you over them.
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Penetration Price Strategy - This strategy centers around capturing the market share by setting prices below market level to attract customers. Business owners readjust their prices after seizing a substantial market share.
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Price Skimming - It is the strategy of charging a greater price point for an item when releasing it in the market. Commonly, you can see this in action when there are innovative products in the market that don’t have any competition. They prices are high at first, but then they reduce over time.
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Cost-Based Pricing
This kind of pricing sets prices based on the cost of items being sold. A specific profit figure or percentage gets added to the product’s cost. It is the final price at which customers get the product at.
Bundling
Bundling refers to clustering various complementary items into one package price. This price is less than the sum of their separate prices. You can get our pricing strategy assignment help to learn more about this topic.
Absorption Pricing
This pricing generally determines the long-term price of an item that’s required to fulfill all business expenses. In this method, the cost of an item contains all the variable costs and a part of all the fixed costs.
Dual Pricing
It is a pricing situation when a business sells the same item or service at different rates in different markets. Usually, you can encounter dual pricing when a product launches in an international market. It is an important topic for which you can seek our pricing strategy assignment service.
High-low Pricing
According to this concept, the prices of items are set higher than the current market price. At the same time, a small number of items have prices below market rates. The underlying aim is to attract customers with low prices for a few products, at which point, they will also purchase some items at high prices.
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