Pricing strategies are a range of pricing tools that can be
used to achieve long term aims of the business
Price skimming: entering a
market with a high price to
attract early adopters and
recap high developments
costs. e.g. designer clothes,
PlayStation, ipad etc.
Advantages: - high prices = 'must have'.. -
can recover higher research and
development costs... - early adopters'
usually but to be trendsetters
Disadvantages: -cutting prices at a later
stage can damage image - 'Ripped off?'
Penetration pricing: below market
pricing to establish product in
competitive market
Advantages: -low priced/ high
sales volume.. - production cost
per unit kept down as business
can bulk buy.. - price can be
increased at later date.
Disadvantages: - brand
image=cheap.. -up-market
outlets will not want stock
Predator pricing - a firm sets low prices
to driver other firms out of the market.
e.g. cut price airline firms have led to
smaller firms closing down.
aims to reduce
the number of
competitors in
the market
Pricing strategies for
existing products
Price leader: a product that has a
significant market share and can
influence price
sets own prices, others
follower, strong image,
dominant businesses
Price taker: a strategy where a firm sets its
prices on the same level as the dominant firm
no option to charge market price, no differentiation in product, other forms of marketing mix