Topic 4: Pricing Strategies There is no shortage of pricing approaches, and as c
ID: 372243 • Letter: T
Question
Topic 4: Pricing Strategies
There is no shortage of pricing approaches, and as customers, we are exposed to all of them at some time or another in our purchasing processes. Choose one of the pricing approaches discussed in the readings and discuss a product, the pricing approach, and why you think it is the most appropriate approach for that particular product given your consumer characteristics. Be sure you understand the definition of your approach before tackling this topic.
Many of you will be tempted to use promotional pricing since it is the easiest to demonstrate. So promotional pricing is not "for sale" (pun intended).
Pick one of the other approaches for this topic.
Explanation / Answer
Let us consider Penetration Pricing.
Penetration pricing is the marketing strategy of offering new products at a price lesser than its competitors. When the company offers new products, new technology, then the companies set a lower price for them initially to allow the customers try the new product. This strategy is adopted by companies in order to attract new customers and increase the acceptance level of the new product in the market. Penetration pricing is a way to move customers away from their competitors. For example, Wal-Mart uses penetration pricing in new geographic locations. By underselling the products than the competitors, Wal-Mart is ready to lose money by setting a lower price for the products, so that customers are attracted towards the store. Also, Wal-Mart offer new products through their stores at a much lower price than their competitors to attract customers for the product.