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Pricing Strategies - Coggle Diagram
Pricing Strategies
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Psychological: Price is set just below the next rounded number, e.g 49.99 instead of 50
Adv
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Product fit price bands customer have in mind e.g customer is looking for a less then £500 PC so business will price it to be £499.99 to trick
Disadv
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Some customer may ignore the attempt at making the product seem cheaper so rest of marketing mix would have to convince them to purchase
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Destroyer/predatory: Price deliberately set extremely low for a period of time to force out competitors
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Penetration: Price is set low to begin with and increases over time e.g 'trial prices' on new chocolate bars
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Loss leaders: Promotional prices of one or more products is set unprofitably low to entice customer in to buy other products
Adv
Hopefully, customer will buy normal-priced products while buying loss leader
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Disadv- Risk that some customer will buy the loss leaders, impacting on profits
Price discrimination: Prices are altered depending on a discriminating factor, e.g child day ticket etc
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Disadv
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Loss in potential revenue from selling at a cheaper price, e.g more kids using bus then adults