Pricing Strategies
After establishing pricing objectives and analyzing factors affecting pricing decisions, a company must then determine what pricing strategy it will follow. A company may follow different pricing strategies for different products based on where the product is in its life cycle. Introductory pricing strategies are used for new products, while different approaches are used for more mature products.
Introductory Pricing Strategies
- Skimming price strategy - the company sets a high price for a product initially; going after consumers who are willing to pay a high price, such as lead users.
- Penetration pricing strategy - the company sets a low price initially, hoping to quickly gain market share and encourage buyers to try the product.
- Everyday low prices - the company sets a low price and expects to charge that price throughout the product's life cycle.
