Product+Price

//At what price should I sell my product?// Of all the aspects of the marketing mix, price is the one, which creates sales revenue - all the others are costs. The price of an item is clearly an important determinant of the value of sales made. In theory, price is really determined by the discovery of what customers perceive is the value of the item on sale. Researching consumers' opinions about pricing is important as it indicates how they value what they are looking for as well as what they want to pay. The pricing policy will vary according to time and circumstances.

TYPES OF PRICING STRATEGIES
 * ** Pricing Strategy ** || ** Definition ** || ** Example ** ||  ||
 * ** Penetration pricing ** : ||  Here the organization sets a low price to increase sales and market share. Once market share has been captured the firm may well then increase their price.  || A television satellite company sets a low price to get subscribers then increases the price as their customer base increases. ||^   ||
 * ** Skimming pricing ** : ||  The organization sets an initial high price and then slowly lowers the price to make the product available to a wider market. The objective is to skim profits of the market layer by layer.  || A games console company reduces the price of their console over 5 years, charging a premium at launch and lowest price near the end of its life cycle. ||^   ||
 * ** Competition pricing ** || Setting a price in comparison with competitors. Really a firm has three options and these are to price lower, price the same or price higher  || Some firms offer a price matching service to match what their competitors are offering. ||^   ||
 * ** Product Line Pricing: ** || Pricing different products within the same product range at different price points.  ||  An example would be a DVD manufacturer offering different DVD recorders with different features at different prices eg A HD and non HD version.. The greater the features and the benefit obtained the greater the consumer will pay. This form of price discrimination assists the company in maximizing turnover and profits.  ||^   ||
 * ** Bundle Pricing: ** || The organization bundles a group of products at a reduced price. Common methods are buy one and get one free promotions.  || This strategy is very popular with supermarkets. ||^   ||
 * ** Psychological pricing: ** || The seller here will consider the psychology of price and the positioning of price within the market place  ||  The seller will therefore charge 99 cents instead $1 or $199 instead of $200. The reason why this method works is because buyers will still say they purchased their product under $200 dollars, even though it was a dollar away.  ||^   ||
 * ** Premium pricing ** ||  The price set is high to reflect the exclusiveness of the product.  ||  An example of products using this strategy would be first class airline services, Porsche etc.  ||^   ||
 * ** Optional pricing ** :  ||  The organization sells optional extras along with the product to maximize its turnover.  ||  This strategy is used commonly within the car industry.  ||^   ||