1. Pricing Mix Strategies
This presentation will focus on different pricing strategies in marketing.

2. Factors that Affect Price
Fixed and variable costs
Competition
Company objectives
Proposed positioning strategies
Target group and willingness to pay
There are five factors that are important to remember when setting a price for a good or service. The first factor to remember is the fixed and variable costs which are all of the costs faced by companies. The next factor is competition. What price are competitors setting? The next factor to remember is company objectives. The next factor is proposed positioning strategies. And finally, the last factor is the target group and their willingness to pay. It would not be smart to set a price that does not fit within the target group.

3. Pricing Strategies Cost Based Pricing Optional Pricing
Captive Product Pricing
Premium Pricing
Penetration Pricing
Psychological Pricing
Skimming Pricing
Pricing Strategies
Promotional Pricing
Economy Pricing
There are many pricing strategies that marketers use. Those strategies are captive product pricing, cost based pricing, penetration pricing, optional pricing, premium pricing, psychological pricing, promotional pricing, bundle pricing, cost plus pricing, product line pricing, competition pricing, geographical pricing, economy pricing, and skimming pricing. We will now look at each of these pricing strategies in more detail.
Product Line Pricing
Geographical Pricing
Bundle Pricing
Competition Pricing
Cost Plus Pricing

4. Penetration Pricing Price set low to gain market share.
Once achieved, price is increased.
A TV company may set a low price to gain subscribers, then increase the price after the customer base increases.
Penetration pricing is when the prices are set low in order to gain market share. Once the market share has reached a desired value, the price of the product or service will be increased. TV or TV satellite companies usually set their prices low in order to gain subscribers and increase the price after the customer base has increased.

5. Economy Pricing No frills, low price.
Marketing and promotion cost at minimum.
Generic Food Brands
Economy pricing is just basically a no frills or tricks, low price. The marketing and promotion cost is at a minimum for these products. A great example of this is generic food brands such as the pictures featured.

6. Skimming Pricing Initial high price to attract customers.
Slowly lowers the price.
Objective: Skim profits of the market layer by layer.
Game Consoles
Skimming pricing is when a business or company will set an initial high price to attempt to attract customers. Overtime, the price of the product will be lowered. The objective of this pricing strategy is to obtain the maximum amount of profits from the market layer by layer. A great example of skimming pricing is video game consoles like X-Box and PlayStation. When they are released on the market, the price is high to attract customers. As time progresses, the price of the consoles begins to drop.

7. Psychological Pricing
Expects consumer to respond emotionally, rather than rationally.
Understand that consumers use price as an indicator of many factors.
Selling an item at $99 instead of $100.
Psychological pricing is used when a company expects the customer to respond emotionally rather than rationally. The company must be understanding that consumers use price as an indicator of many factors such as value, quality, and product life expectancy. The most common example of this is when something is sold for an amount ending in an odd amount such as 9. For example, a company may choose to sell a truck for $10,999 rather than $11,000. This one dollar price difference is very meaningful to pricing.

8. Product Line Pricing
Range of products or services and the pricing reflects the benefits of parts of the range.
Product line pricing occurs when there is a range of products or services. The pricing will reflect the benefits of parts of the range. For example, a basic kindle is $79, a touchscreen kindle is $99, and the touchscreen tablet-like kindle fire is $199. The price of the kindle reflects the benefits of the product.

9. Optional Product Pricing
Companies offer extras that are optional.
The extras will increase the price overall.
Car salesmen offer extra features while also increasing the price of the car.
Optional product pricing occurs when companies offer extras that are optional, but the extras will increase the overall price of the product. One of the most common examples of optional product pricing occurs at car dealerships. When purchasing a car, the buyer is given many options of additional features that will incur an increase in the overall price. Extra features are touch screen systems, navigation systems, power windows, push to start engines, sunroofs, moon roofs, and much more.

10. Captive Product Pricing
Products are sold with complements.
Sold at premium price, because consumers have no choice.
Captive product pricing occurs when products are sold with complements. This means that a product is sold in a pack with items that complement that product. These products are sold at a premium price because consumers have no choice of rejecting the complementary items. Some examples of this are printers being sold with ink cartridges and razors being sold with refillable cartridges. Can you think of any products that you purchase that may have used the captive product pricing strategy?

11. Product Bundle Pricing
Sellers combine several products into one package.
Usually used at the end of a product life cycle.
Video Games
Product bundle pricing occurs when sellers combine several products into one package and sell that package at one price. Product bundle pricing usually occurs near the end of the product’s life cycle, but this is not the case for all bundles. The two bundles featured contain a gaming system and a game. Product bundle pricing occurs a lot around the holidays in order to promote certain products.

12. Promotional Pricing Discounts Money-Off Vouchers Buy One, Get One
Have you ever heard of a promo? If you have, this means that you are familiar with promotional pricing. Promotional pricing is used in the form of discounts, coupons, or sales.

13. Geographical Pricing
Notice variations in price in different parts of the world.
Rarity value
Shipping costs
Geographical pricing focuses on various parts of the world and how pricing factors affect that given region. When working with geographical pricing, one must consider the rarity value of the product and the shipping costs to that area. Could you guess where the product is being produced in the map featured? If so, why do you think it is in that region?

14. Premium Pricing
Price set high to reflect the exclusiveness of the product.
Premium pricing occurs when the prices are set high to reflect the exclusiveness of the product. Great examples of this are Porsche, Louis Vuitton, and Apple products. Can you think of any products that are priced using the premium pricing strategy?

15. Price Matching Guarantees
Competition Pricing
Setting a price in comparison with competitors.
Choice to increase or decrease price.
Price Matching Guarantees
Competition pricing is when a price is set in comparison with competitors. When using this strategy, a business or company is given the choice to increase or decrease the price of a product. Many large stores, like Walmart and target, offer price match guarantees. This means that they will adjust the price of the their product if a competitor has the same product at a different price.

16. Cost Based Pricing Cost Plus Pricing
Adds a percentage to costs as profit margin.
EX: An item costs $100 to produce an item and the firm adds a 20% profit margin, so the selling price would be $120.
Cost of production and distribution taken into account.
Decide on a mark-up.
Common when businesses are in a volatile industry.
Cost based pricing is when the cost of production and distribution are taken into account and then a mark-up is decided on. This type of pricing is common when a business is in a volatile industry. Volatile means that something is liable to change rapidly and unpredictably. Cost plus pricing adds a percentage to costs as the profit margin. An example of this is when an item costs $100 to produce and the firm adds a 20% profit margin so the selling price of the item would be $120.

17. Resources: http://www.marketingteacher.com/pricing-strategies/