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MARKETING - Coggle Diagram
MARKETING
Pricing Methods
Skimming
The product is special, maybe made with high technology, and the price of that product is very high when it first appears on the market. This is to use high prices to earn back high costs. The idea is to make more money before alternative products appear.
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Company will use this strategy while they are the only one produce that product or their product is high technology and will cost a lot while produce these products.
Penetration
A penetration means setting a very low price when a new product enters the market. This is trying to make a new product recognized by the public or to persuade consumers to try the new product for the first time. This will enable the product to take more market shares. But when consumers become familiar with the new product and start buying in bulk, sellers start to raise prices in order to make a profit.
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Company will use this strategy while their product is not familiar to public and want increase the recognition of the product.
Competitive pricing
Competitive pricing means that the pricing of a product is similar to the product of competitors. This is to let customers decide whether to buy the product not based on the price, but from other aspects, such as the service quality and so on.
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Businesses selling similar products will use this pricing method, because the services are different from business to business, while the products are similar.
Loss-leader
A Loss-leader is a seller who sells a product at a low price or at a loss. This is because they hope to attract customers with lower prices and then get them to buy more profitable products. And also by using a pretty low price to force competitors out of the market.
Gillette is an example of a Loss-leader. Gillette sells mechanical razor for a low price at the start to attract customers. In the end, it becomes a very successful razor blades seller.
The loss-leader method is used by the company that wants to attract customers with the lower price and get them to buy the more profitable product.
Cost-plus
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This is most often used in the food industry, such as pizza.
The product lifecycle.
Development
The developer is developing the product. There is no profit created in this stage. This stage is used to produce and create products.
Introduction
This stage is the stage when the product just enters the market. Sales growth is small at this stage. This stage is used to promote the product to the public and familiarize the public with the product. Then get some market shares.
Growth
When the product is very familiar and liked by the public, then the profit started to increase because sales growth is largely with the increase in numbers of customers who will buy that product.
Maturity
At this stage, many potential customers have already purchased the product, and repeat customers have been generated. Product sales will slow. At this stage, the seller may use discounts to promote or motivate consumers to buy the product, as this can increase market share.
Decline
At this stage, not many consumers are buying the product. At this time, the enterprise can choose to no longer sell the product or sell the last few products at a discount.