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autocomplete="off"><input value="Click Here" id="SubmitNew" class="signUp" type="Submit"></form></div></div><div class="storySection flt"><div class="def_top"><div class="main_category flt">Marketing</div><div class="prevNextDefNames"><ul><li class="flt"><a href="/definition/pricing-options"><div class="prevDef flt"><i class="prev"></i>PREV DEFINITION</div></a><div class="clr"></div><div id="prevDefLinks"><a href="/definition/pricing-options">Pricing Options</a><br><div class="synopsis">Apart from the four basic pricing strategies -- premium, skimming, economy or value and penetration -- there can be several other variations on these.</div><a class="moreRead" href="/definition/pricing-options">Read More</a></div></li><li class="flt"><a href="/definition/product"><div class="nextDef fltr">NEXT DEFINITION<i class="next"></i></div></a><div class="clr"></div><div id="prevDefLinks"><a href="/definition/product">Product</a><br><div class="synopsis">A product is the item offered for sale. A product can be a service or an item. It can be physical or in virtual or cyber form.</div><a class="moreRead" href="/definition/product">Read More</a></div></li><div class="clr"></div></ul></div><div class="clr"></div></div><h1 class="definitionTitle">What is 'Pricing Strategies'</h1><br><div class="section1"><div class="Normal"><strong>Definition: </strong>Price is the value that is put to a product or service and is the result of a complex set of calculations, research and understanding and risk taking ability. A pricing strategy takes into account segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst others. It is targeted at the defined customers and against competitors. <br><br> <strong>Description: </strong>There are several pricing strategies: <br><br> <em>Premium pricing:</em> high price is used as a defining criterion. Such pricing strategies work in segments and industries where a strong competitive advantage exists for the company. Example: Porche in cars and Gillette in blades. <br><br> <em>Penetration pricing: </em>price is set artificially low to gain market share quickly. This is done when a new product is being launched. It is understood that prices will be raised once the promotion period is over and market share objectives are achieved. Example: Mobile phone rates in India; housing loans etc. <br><br> <em>Economy pricing:</em> no-frills price. Margins are wafer thin; overheads like marketing and advertising costs are very low. Targets the mass market and high market share. Example: Friendly wash detergents; Nirma; local tea producers. <br><br> <em>Skimming strategy: </em>high price is charged for a product till such time as competitors allow after which prices can be dropped. The idea is to recover maximum money before the product or segment attracts more competitors who will lower profits for all concerned. Example: the earliest prices for mobile phones, VCRs and other electronic items where a few players ruled attracted lower cost Asian players. <br><br> These are the four basic strategies, variations of which are used in the industry.<meta content="cms.next" name="cmsei"></div></div><div class="clr"></div><div id="widgetSEO" class="widgetSEO"><div class="readMoreTopics seoWidget seoWidget_con clearfix"><div class="prel"><h2 class="head">Read More News on</h2><div class="nextprev-btn slider_embd"><div data-ga-onclick="Previous | href" class="prev-btn arw_blk disable flt"><span class="alft"></span></div><div class="ts-dots flt"><ul></ul></div><div data-ga-onclick="Next | href" class="next-btn arw_blk ryt flt"><span class="aryt"></span></div></div></div><div id="slides_SEO" class="overh slides clearfix"><ul><li><a href="/topic/economy">ECONOMY</a><a href="/topic/market-conditions">MARKET CONDITIONS</a><a href="/topic/market-share">MARKET SHARE</a><a href="/topic/product">PRODUCT</a></li><li><a href="/topic/buyers">BUYERS</a><a href="/topic/suppliers">SUPPLIERS</a><a href="/topic/pricing-strategies">PRICING STRATEGIES</a><a href="/topic/sponsorship">SPONSORSHIP</a></li><li><a href="/topic/media">MEDIA</a><a href="/topic/advertising-agency">ADVERTISING AGENCY</a><a href="/topic/brand-managers">BRAND MANAGERS</a><a href="/topic/publicity">PUBLICITY</a></li><li><a href="/topic/event">EVENT</a></li></ul></div></div></div><div class="prevNextDefNames"><ul><li class="flt"><a href="/definition/pricing-options"><div class="prevDef flt"><i class="prev"></i>PREV DEFINITION</div></a><div class="clr"></div><div id="prevDefLinks"><a href="/definition/pricing-options">Pricing Options</a><br><div class="synopsis">Apart from the four basic pricing strategies -- premium, skimming, economy or value and penetration -- there can be several other variations on these.</div><a class="moreRead" href="/definition/pricing-options">Read More</a></div></li><li class="flt"><a href="/definition/product"><div class="nextDef fltr">NEXT DEFINITION<i class="next"></i></div></a><div class="clr"></div><div id="prevDefLinks"><a href="/definition/product">Product</a><br><div class="synopsis">A product is the item offered for sale. A product can be a service or an item. It can be physical or in virtual or cyber form.</div><a class="moreRead" href="/definition/product">Read More</a></div></li><div class="clr"></div></ul></div><div class="related_definition"><div class="related_defHeader"><div class="head flt">Related Definitions</div><div class="FAQ_pagination fltr"><div class="flt" id="pre"><a href="javascript:void(0);"><i class="prev"></i></a></div><div class="fltr" id="post"><a href="javascript:void(0);"><i class="next"></i></a></div><div class="clr"></div></div><div class="clr"></div></div><ul><li><a class="bdbottom" title="5 Forces Analysis Of The Environment" href="/definition/5-forces-analysis-of-the-environment">5 Forces Analysis Of The Environment<div class="synopsis"><p>The five forces model of analysis was developed by Michael Porter to analyze the competitive environment in which a product or company works. Description: There are five forces that act on any product/ brand/ company: 1. The threat of entry: competitors can enter from any industry, channel, function, form or marketing activity. How best can the company take care of the threat of new entrants? 2</p></div></a><a class="bdbottom" title="Advertising" href="/definition/advertising">Advertising<div class="synopsis"><p>Advertising is a means of communication with the users of a product or service. Advertisements are messages paid for by those who send them and are intended to inform or influence people who receive them, as defined by the Advertising Association of the UK. Description: Advertising is always present, though people may not be aware of it. In today's world, advertising uses every possible media to </p></div></a><a title="Advertorial" href="/definition/advertorial">Advertorial<div class="synopsis"><p>An advertorial is a form of advertisement in a newspaper, magazine or a website which involves giving information about the product in the form of an article. Usually, a brand pays the publisher for such an article. Description: Advertorials are advertisements that appear in the media, be it magazines, newspapers or websites. Advertorials are paid content. They are used by marketers to educa</p></div></a><a title="Affiliate Marketing" href="/definition/affiliate-marketing">Affiliate Marketing<div class="synopsis"><p>erved the tags 'affiliate links' or 'sponsored posts' on websites before? Or have you wondered if it might be possible to earn money anytime, from anywhere? Well, that is the concept behind affiliate marketing. Affiliate marketing is a concept where an affiliate who enjoys a product and promotes the products on their social platforms receives a profit whenever a sale is made. Did you know that aff</p></div></a></li><li><a class="bdbottom" title="Ambient Advertising" href="/definition/ambient-advertising">Ambient Advertising<div class="synopsis"><p>Ambient Advertising is about placing ads on unusual objects or in unusual places where you wouldn’t usually expect to have an advertisement. Description: Ambient advertising evolved as a concept because it has a lasting impact on the minds of consumers which makes it more effective. Ambient advertising is all about creativity, and how effectively the advertiser is able to communicate the message </p></div></a><a class="bdbottom" title="Ambush Marketing" href="/definition/ambush-marketing">Ambush Marketing<div class="synopsis"><p>Ambush marketing, a term first coined by marketing guru Jerry Welsh, has not really been rigorously defined. However, it broadly refers to a situation in which a company or product seeks to ride on the publicity value of a major event without having contributed to the financing of the event through sponsorship. It is typically targeted at major sporting events - like the Olympic Games or the world</p></div></a><a title="Behavioural Segmentaion" href="/definition/behavioural-segmentaion">Behavioural Segmentaion<div class="synopsis"><p>Behavioral segmentation is a more focused form of market segmentation that groups different consumers based on specific behavioral patterns they display when making buying a product. Description: Behavioral segmentation classifies organizations and individuals into different categories based on how they act or behave towards products. It involves classifying consumers or grouping them based on </p></div></a><a title="Blue Ocean Strategy" href="/definition/blue-ocean-strategy">Blue Ocean Strategy<div class="synopsis"><p>'Blue Ocean Strategy is referred to a market for a product where there is no competition or very less competition. This strategy revolves around searching for a business in which very few firms operate and where there is no pricing pressure. Description: Blue Ocean Strategy can be applied across sectors or businesses. It is not limited to just one business. But, let's first understand what is B</p></div></a></li><li><a class="bdbottom" title="Brand Tribe" href="/definition/brand-tribe">Brand Tribe<div class="synopsis"><p>A brand tribe could be regarded as a group of people who collectively identify themselves with the product and share similar views and notions about the brand. They are not just consumers of the product, but play a major role in its promotion. Description: A product is successful when it becomes a cult. Companies are not just selling consumers their products nowadays, but an idea, a vision as h</p></div></a><a class="bdbottom" title="Brand Valuation" href="/definition/brand-valuation">Brand Valuation<div class="synopsis"><p>Brand valuation is the process used to calculate the value of a brand or the amount of money another party is prepared to pay for it. Description: A brand comprises tangible as well as intangible elements relating to the company's style, culture, positioning, messages, promises and value proposition. Brand Valuation, subsequently, is an estimate of the financial value of a brand. 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