Pricing Strategies :: Business Market Marketing Price

determine Strategies (graphics not included)One of the four major elements of the marketing melt is price. set is an important strategic issue because it is related to return positioning. price also affects other marketing mix elements as well, such as product features, channel decisions, and promotion. A determine strategy is a rail of action designed to achieve price objectives. This strategy helps marketers set prices. at that place are many ways to price a product. The following, figure 1.1, shows a list of five major types of pricing strategies. (Business, eighth Ed., pg 421)Figure 1.1New-Product PricingThere are two primary types of new product pricing strategies, price skimming and penetration pricing. An organization can use atomic number 53 or both of them over a calculated period of time. terms Skimming involves charging the highest price possible for a short time where a new, innovative, or much-improved product is launched onto a market. The objective with skimming is to skim the toss off customers who are willing to pay more to have the product sooner. Prices are lowered once demand falls. (Business, eighth Ed., pg 422)Penetration Pricing is the opposite extreme it involves the setting of lower, rather than higher price for a new product. The main purpose is to build market share quickly. The seller wants to discourage competitors from entering the market by building a full-size market share quickly. (Business, 8th Ed., pg 422)Differential PricingDifferential pricing egests when a company attempts to charge divergent prices to two different customers for what is basically the same product. For this to be effective, the market must have multiple segments with different price sensitivities. Differential pricing can happen in some(prenominal) ways negotiated pricing, secondary-market pricing, periodic discounting, and random discounting. The following describes two of the ways.Negotiated Pricing happens when the final exam price is established through bargaining between the seller and the buyer. This occurs in various industries and at all levels of distribution. Prices are normally negotiated for houses, cars and used merchandise. (Business, 8th Ed., pg 423)Periodic Discounting is the temporary reduction of prices. This normally happens when retailers have holiday sales or seasonal sales. The downside of this is that customers can predict when the price reductions will occur and hold off on buying until the sales take place. (Business, 8th Ed., pg 423)Psychological PricingPsychological pricing is a marketing habituate based on the theory that certain prices have a mental impact.