Pricing Strategy by Lucas Holmes https://padlet.com/2007holmes/g7d14pbd14ca Made with good vibes en-us 2017-12-07 13:15:52 UTC 2025-12-05 18:16:29 UTC hello@padlet.com Competitive Pricing 2007holmes https://padlet.com/2007holmes/g7d14pbd14ca/wish/214085834 Competitor-based pricing involves setting prices based on what rivals are charging. If there is strong competition, customers are faced with wider choices of who to buy. 
They will most likely buy from the cheapest provider. 
Most providers in a competitive market do not have the power to set price higher than the competitive market. ]]> 2017-12-07 13:16:41 UTC https://padlet.com/2007holmes/g7d14pbd14ca/wish/214085834 Penetration Pricing 2007holmes https://padlet.com/2007holmes/g7d14pbd14ca/wish/214089129 Prices are set low, to break into a market or achieve rapid growth in market share.
Many firms may use this when their product is first released or to entice new customers.
Can be used as an extension strategy or to attract a new market segment.

Example:
When Netflix entered the market, it had to convince consumers to wait a day or two to receive their movies. To accomplish this goal, it offered introductory subscription prices as low as a dollar. The pricing strategy was so effective that traditional providers such as Blockbuster soon were edged out of the market]]> 2017-12-07 13:24:33 UTC https://padlet.com/2007holmes/g7d14pbd14ca/wish/214089129 2007holmes https://padlet.com/2007holmes/g7d14pbd14ca/wish/214092717 2017-12-07 13:32:50 UTC https://padlet.com/2007holmes/g7d14pbd14ca/wish/214092717 Price Skimming 2007holmes https://padlet.com/2007holmes/g7d14pbd14ca/wish/214093223 Opposite of Penetration Pricing, its used in the introduction stage of a new product. Used for technological and fashion products, appeal to early adopters.
It skims the market, it appeals to exclusive market. The objective is to maximise value added and profits, as well as establishing the brand name.

Example:
Apple has added a twist to the skimming strategy. Rather than introducing their products at a high price and then lowering their prices later, Apple stakes out a price and then maintains and defends that price by significantly increasing the value of their products in future iterations.

For example, over the past six years, the average sales price of the iPhone has remained remarkably stable with the subsidized price remaining at ~$200 and the unsubsidized price hovering around $650.

]]> 2017-12-07 13:34:11 UTC https://padlet.com/2007holmes/g7d14pbd14ca/wish/214093223 Cost Plus Pricing 2007holmes https://padlet.com/2007holmes/g7d14pbd14ca/wish/214414625 Firm fixes the price for its product by adding a fixed percentage profit margin to avg cost of production per product. The size of the profit depends on factors: competition and strength of demand.

Example:
Milk is set at a price to get a specific profit margin. If cost of production for a firm is £1.00 then the company will set the price at £1.30 to get a specific profit of 30p.]]> 2017-12-08 09:02:33 UTC https://padlet.com/2007holmes/g7d14pbd14ca/wish/214414625 Predatory Pricing 2007holmes https://padlet.com/2007holmes/g7d14pbd14ca/wish/214416510 Firm sets very low prices in order to drive other firms out of the market, cut airline fares have led to some small airlines closing/ being taken over by competitors.
Can be known as 'destroyer pricing'.

Example:
Greggs set up near other small bakery in busy town centres etc. they then have the brand power to set the price low and increase it over time. They will be able to run the small bakery out of business over time, as the customer drawn to them. 

]]> 2017-12-08 09:11:36 UTC https://padlet.com/2007holmes/g7d14pbd14ca/wish/214416510 Psychological Pricing 2007holmes https://padlet.com/2007holmes/g7d14pbd14ca/wish/214417972 Intended to give an impression of a value (£3.99 not £4.00). Some firms like M&S don't use this type of pricing anymore as they feel it doesn't attract more customers.

Example:
Technological items will sell for hundreds of pounds, however, use psychological pricing as they don't price it on £500 for a TV but for £499 as it looks more appealing.]]> 2017-12-08 09:19:05 UTC https://padlet.com/2007holmes/g7d14pbd14ca/wish/214417972 Loss Leaders 2007holmes https://padlet.com/2007holmes/g7d14pbd14ca/wish/214420629 Some firms such as supermarkets set low prices for certain products in order to encourage consumers to buy other fully priced products, leads customers to the store, then they normally buy more, they have a greater profit available.

Example:
PS have there price on the playstation set lower, potentially making a loss, so that the consumer will buy full priced extras like games and controllers, they will then maximise profits on these products.]]> 2017-12-08 09:30:12 UTC https://padlet.com/2007holmes/g7d14pbd14ca/wish/214420629