Pricing Strategies :: Business Market Marketing Price

determine Strategies (graphics not included)One of the four major elements of the marketing mix is value. Pricing is an cardinal strategic issue because it is related to growth positioning. Pricing also affects other(a) marketing mix elements as well, such as product features, add decisions, and promotion. A pricing strategy is a course of action intentional to achieve pricing objectives. This strategy helps marketers set prices. There atomic number 18 many ways to price a product. The following, figure 1.1, shows a list of vanadium major types of pricing strategies. (Business, 8th Ed., pg 421)Figure 1.1New-Product PricingThere ar two primary types of new product pricing strategies, price grazing and penetration pricing. An organization can use one or some(prenominal) of them over a calculated period of time.Price 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 cream get rid of customers who are willing to pay more to have the product sooner. Prices are get down once demand falls. (Business, 8th Ed., pg 422)Penetration Pricing is the opposite uttermost(a) it involves the setting of lower, rather than higher price for a new product. The of import purpose is to build market allocate quickly. The seller wants to discourage competitors from unveiling the market by building a large market share quickly. (Business, 8th Ed., pg 422) first derivative PricingDifferential pricing occurs when a party attempts to charge different prices to two different customers for what is essentially the same product. For this to be effective, the market must have multiple segments with different price sensitivities. Differential pricing can happen in several ways negotiated pricing, secondary-market pricing, oscillating discounting, and random discounting. The following describes two of the ways.Negotiated Prici ng happens when the final price is effected 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 shipboard reduction of prices. This normally happens when retailers have holiday sales or seasonal worker 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 practice based on the theory that certain prices have a psychological impact.