Pricing Strategy

By
Abhishek Kujur
Bhumika Manwani
Pricing to Gain Market Share – Penetration pricing
PROs
• Used to enter a market and gain market share
• Will require to keep product cost low as their
introductory offer in the market and creating a
consumer base
• Help in building brand loyalty
• By creating a mass market for the product, the
company can establish itself as a brand leader.
So, customer will not object even to a slight
price rise later.
CONs
• Low price may not yield enough profit to cover
up development expenses in short run.
• The price and quality relationships may
bear adverse implications. A lower price may
be related to low quality of the product.
• Once a low price is quoted, it is difficult to rise
it later
• If quick sales do not take place, funds will be
locked up unnecessarily.
Economy pricing or No Frill Low Price
PROs
• Will works when we have lower overheads and costs
than our competitors. Low cost base allows to sell at
a discount price so that we can gain a high market
share.
• Economy pricing helps companies to survive during
times of economic instability, as it allows them to set
lower prices that appeal to customers who are
"squeezed" financially
• Selling a similar item at a lower price can help to
undercut market rivals and gain a robust competitive
edge
Cons
• Smaller businesses that use economy pricing may
struggle to remain profitable, as they are less likely to
achieve the volume of sales needed for this strategy
to be successful
• Customers loyalty is not guaranteed. Economy
customers are always looking out for the "best deal,"
and are not afraid to switch suppliers to obtain it. This
means that company is vulnerable to competitors,
and that its profit margins can become unstable,
varying greatly from month to month
 Psychological Pricing Strategy
PROs
• Psychology pricing is the pricing technique used in
marketing by the sellers to lure customers towards
their product or service by exploiting the psychology
of the customer
• Helps company in generating more sales
• Attract customers towards the company from its
competitors
• when people search on internet, they usually do it for
products under $xx or $xxx this will help company to
appear in these searches
CONs
• Companies tend to pay attention to psychology of the
customer rather than their own product or service
• Customers do not see only the price rather they
compare all things over internet like features, brand
name, customer reviews and so on and then they
purchase the product
• consumers who are paying for product in cash then
problem of change comes as not all shopkeeper have
change which results in customer paying rounded off
amount
 Pricing Strategies of Product Line

PROs CONs
• This strategy reflects a strategic cost of • Negative impact on the loyal
making a product popular and consumed by
the consumer with a fair increment over
customers of the brand if they don’t
the range of the product or the service find products worthy of the price
• Attract more consumers and keep them
interested in the products offered
• Price lining reduces the expense of
marketing and advertising
 Pricing for promotions

PROs CONs
• Promotion offers can include, discount offers,
gift or money coupons or vouchers, buy one
• Promotional pricing can attract the
and get one free types of customers who are only
• Help in Building brand awareness
looking for deals
• Newsworthiness • Reduced revenue
• Promotional pricing may earn you less on the • Perception of lower quality
items that are actually on sale, but it may
encourage customers to purchase additional
items on which you earn a higher profit.
 Pricing of Premium Products
• This strategy works just the other way
round. Premium products are priced higher
due to their unique branding approach
• High Margin of Profit
• They are high priced products not everyone
can buy these products and therefore
customer who buys these products tend to
show off these products and hence these
products achieve cult status in the minds of
the customers
• Company adopting this pricing strategy loses
out on majority of consumers who are price
conscious
• Marketing and Branding Expenses
• Premium pricing cannot be adopted for every
product and hence it limits its application as
far as the company is concerned.
• this strategy cannot be adopted for those
products which have cutthroat competition
and elastic demand
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 Money off Coupons: Discount Coupons will be offered
to consumers through magazines/newspapers, emails
and purchase of product

Loyalty schemes: More the customers spend, more

Pricing for points they accumulate which will lead to greater
rewards

Promotion Trade Promotion: Trade buyers that will purchase

strategy in product from suppliers will receive several distinct price
promotion

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