#Example of predatory pricing strategy free
BOGOF: Buy one, get one free offer triggers the greed among the customers as they get two products for the price of one.Prestige Pricing: This involves rounding off and setting a higher price for premium and exclusive products as rounded figures are easily processed and are preferred in such cases.For example – the price of a $3 product is set as $2.99 in supermarkets as customers’ brains process $2.99 to be nearer to $2 and not $3. Charm Pricing: This involves reducing the price by a minimal amount (say 1 cent) which makes the customer perceive the price to be less.Psychological pricing refers to the psychological pricing strategies marketers use to make customers buy the products, triggered by emotions rather than logic. Smartphones (both iPhones and Android) are introduced in the market at a higher price, but the price is reduced as time passes. The initial high price not only helps the business to recover its development costs but also gives the product perception of being an exclusive and premium product. The strategy got its name from successive skimming of layers of cream or the customer segments as the prices are lowered over time. The idea is to maximise the profits on early adopters before competitors enter the market and make the product more price sensitive. Price Skimming is a strategy of setting a relatively high introductory price of the product when the product is new and unique and the market has fewer competitors. The consumer never gets to test if the branded is better, yet he buys the branded offering thinking if it’s expensive, it must be better. Premium Pricing Exampleīranded unleaded petrol is sold at a higher price than regular unleaded petrol. Spending a substantial amount on building a premium or luxury brand helps the business create a barrier for the competitors to position their products in the same class. The premium pricing strategy has the advantages of producing higher revenues and building a premium brand image. However, to make this pricing strategy a success, a business has to work really hard on the quality of the product and the brand to create a value perception. The idea is to encourage a perception among the buyers that the product has a more utility or a higher value when compared to competitors’ products just because it is sold at a premium price. Premium pricing, also called image pricing or prestige pricing, is a pricing strategy of marking the price of the product higher than the industry standards/competitors’ products.
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