Essay Sample on Pricing Strategies in Marketing

Introduction

Pricing strategies are techniques used by businesses, organizations or corporates to market their goods and services in a competitive market situation. It takes into account the customer's ability to pay, trade margins, competitor's price value, and the cost of inputs. The juxtaposition of the techniques is galvanized at increasing demand for goods in the market for one business against its competitors. According to Hafezalkotob et al., (2018), different price strategies make a business to stand out when the price of goods and services as compared to its competitors. Several pricing strategies can be employed and effectively succeed in marketing the products

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

Competitive pricing is the first pricing strategy that is employed by businesses to effectively market its products. It comprises techniques of selecting the best price points in the market in order to take advantage of the products or services based on the type of competition. Competitive pricing strategy occurs among businesses selling similar goods and services in order to make themselves unique when comparing themselves to other businesses. However, the scenario occurs only when the pricing level has reached equilibrium. It, therefore, forces a business entity to come up with a suitable price to replace the price of products that have stayed in the market for a long time.

When setting the price for goods and services, a business has to create an environment that ensures the premium standards are achieved that is, generous payments that are not embedded in exploiting customers and incurring of losses of to the business. The business uses different skills to differentiate their products from those of competitors, for example, Netflix employs a technique of ensuring that the way their products are advertised stands out from those of the competitors. This assists the users to see the products as unique and beneficial when compared to products from other competitors.

Price skimming stands out as an important pricing strategy which is used by firms in such a way that, the initial price of goods and services changes with time hence allowing setting of a price segment that meets the interest of the customers. Liu, Zhai and Chen, (2018) denounced that, price skimming is used when there is an inversion of competition in the market and it goes through different segmentations of layers. The adjustment price attracts customers to the products or services hence maintaining a high potential for customers to pay for the products. Price skimming is used when a new product has entered the market which diverts the attention of customers from the existing products.

Penetration pricing is a temporary pricing strategy in the market that promotes many business products with the interest of disposing of their products in order to avoid incurring losses. The strategy is used when a new product is launched into the market. The price of other but similar products is high but the price of the newly launched product is lowered to attract a pool of users hence maximizing the number of products sold. Most businesses go with numbers and this allows more to be sold and more profit to be generated. When the objective of the strategy is made, the new price is changed to the normal price of other similar products.

Conclusion

In a nutshell, pricing strategies target the mass market and they reduce competition. They assist a business to stands out as a unique and strong business when compared to others. They are amazing due to benefits such as assisting businesses to use new tactics which forward thrash them to maximizing their profits and effectively making use of opportunities provided by different price strategies of marketing.

References

Hafezalkotob, A., Mahmoudi, R., Hajisami, E., & Lee, H. M. (2018). Wholesale-retail pricing strategies under market risk and uncertain demand in the supply chain using evolutionary game theory. Kybernetes, 47(6), 1178-1201.

Liu, J., Zhai, X., & Chen, L. (2018). Optimal pricing strategy under the trade-in program in the presence of strategic consumers. Omega.