Selecting pricing strategies. Pricing Strategies for New Products Pricing Strategies

In marketing there are various types pricing strategy, the main ones are the following.

High Price Strategy ("skimming"), provides for the sale of goods initially at high prices, significantly higher than the production price, and then their gradual reduction. It is typical for the sale of new products protected by patents at the introduction stage, when the company first releases an expensive version of the product, and then begins to attract more and more new market segments, offering buyers of various segment groups simpler and cheaper models.

As a rule, such a policy is possible if the product is new, high-quality, has a number of attractive, distinctive features for the consumer who is willing to pay a high price for its purchase, and is designed mainly for innovative consumers.

Using the method of “skimming the cream” from the market makes sense under the following conditions: 1) there is a high and increasing level of current demand from a sufficiently large number of buyers; 2) production costs allow maintaining efficient production output, and financial results contribute to increasing the production of a new product and its supply on the market; 3) a high initial price does not attract new competitors in the production of goods; 4) a high price corresponds to the high quality of the product and does not interfere with attracting new customers.

This type of strategy is becoming increasingly widespread in the market and practically prevails. It is especially actively used when there is a slight excess of demand over supply in the market and the company occupies a monopoly position in the production of a new product. This strategy is acceptable under conditions of low elasticity of demand, when the market reacts passively or does not react at all to lower prices or to their low level, as well as when the efficiency of large-scale production is low.

Low price strategy, or strategy of “penetration”, “breakthrough” into the market, involves the initial sale of off-patent products at low prices in order to stimulate demand, beat competition, drive competing products out of the market, and gain a mass market and significant market share.

The firm achieves success in the market, displaces competitors, achieves a certain monopoly position during the growth stage, and then raises prices for its goods. However, it is currently very difficult to use such a policy as a pricing strategy. It is practically extremely difficult for a company to secure a monopoly position in the market. A low price strategy is not appropriate for markets with low elasticity of demand. It is effective in markets with large production volumes and high elasticity of demand, when the buyer is sensitive to low prices and sharply increases the volume of purchases. In this case, it is actually very difficult to increase prices, since this circumstance causes a negative reaction in the buyer, he is extremely reluctant to increase the price and, most often, may refuse to conclude a deal.

Therefore, marketers recommend using a modified form of this type of strategy: low prices allow the company to “break through” into the market, stimulating sales growth, but in the future they do not increase, but remain at the same low level and even decline.

A low price level when a product enters the market may be due to the following circumstances:

· market sensitivity to prices and high elasticity of demand;
· unattractiveness of low prices for active and potential competitors;
· reduction of production and distribution costs as production and sales volumes of a given product increase.

Prices can be increased quite unnoticed by consumers by canceling discounts or introducing expensive goods into the product range.

You can raise prices if you have a large, established market, whose buyers are interested in purchasing the goods of a particular company and have high “loyalty” to its brand, as well as in the event of corresponding changes in the economic and marketing environment, for example, when there is a general increase in wholesale prices and retail prices, inflation processes, the introduction of export duties, etc.

Differential pricing strategy is actively used in the trading practice of companies that establish a certain scale of possible discounts and surcharges to the average price level for various markets, their segments and buyers: taking into account the types of buyers, the location of the market and its characteristics, the time of purchase, product options and their modifications.

The differentiated pricing strategy provides for seasonal discounts, quantity discounts, discounts for regular partners, etc.; establishment of different price levels and their ratios for various goods in the general range of manufactured products, as well as for each modification, representing a very complex and painstaking work to harmonize the general commodity, market and pricing policy.

The differentiated pricing strategy is preferable if a number of conditions are met:

· easily segmented market;
· the presence of clear boundaries of market segments and high intensity of demand;
· impossibility of resale of goods from segments with low prices to segments with high prices;
· the impossibility of competitors selling goods at low prices in segments in which the company sells goods at high prices;
· taking into account the perception of buyers of differentiated prices to prevent reactions of resentment and hostility;
· consistency of the chosen differentiated form of pricing with the relevant legislation;
· covering additional costs of implementing a differentiated pricing strategy with the amount of additional revenues as a result of its implementation.

The differentiated pricing strategy allows you to “encourage” or “punish” different buyers, stimulate or somewhat restrain the sales of various goods in different markets. Its specific varieties are the preferential price strategy and the discriminatory price strategy.

Preferential pricing strategy. Preferential prices are established for goods and for buyers in which the selling company has a certain interest. In addition, the policy of preferential prices can be carried out as a temporary measure to stimulate sales, for example, to attract buyers to sales.

Preferential prices are the lowest prices at which a company sells its goods. As a rule, they are set below production costs and in this sense may constitute dumping prices. They are used to stimulate sales for regular customers, to undermine weak competitors through price competition, and also, if necessary, to clear warehouse space of stale goods, etc.

Discriminatory pricing strategy. Discriminatory prices are part of a firm's overall pricing strategy for certain market segments and are set at the highest level used to sell a given product. They are used in relation to incompetent buyers who are not oriented in the market situation, to buyers who show extreme interest in purchasing this product, to buyers who are undesirable for the selling company, as well as when pursuing a policy of price cartelization, i.e. concluding various types of price agreements between firms.

Such a strategy is possible when the government pursues a general discriminatory policy towards the country in which the buying company operates: establishing high import or export duties, establishing a mandatory rule for using the services of a local intermediary, etc.

Single Price Strategy, or establishing a single price for all consumers. This strategy strengthens consumer confidence, is easy to apply, convenient, does not require bargaining, and makes catalog sales and mail order possible. However, the single price strategy is not used so often in pricing practice and, as a rule, is limited by time, geographic and product boundaries.

Flexible, elastic pricing strategy provides for changes in the level of sales prices depending on the buyer’s ability to bargain and his purchasing power. Flexible prices, as a rule, are used when concluding individual transactions for each batch of heterogeneous goods, for example, for industrial goods, durable goods, etc.

Strategy of stable, standard, unchanged prices involves the sale of goods at constant prices over a long period. It is typical for mass sales of, as a rule, homogeneous goods for which a large number of competing firms are on the market, for example prices for transport, candy, magazines, etc. In this case, regardless of the place of sale, for quite a long time the goods are sold to any buyer at the same price.

Strategy of unstable, changing prices provides for the dependence of prices on the market situation, consumer demand or production and sales costs of the company itself. The firm sets different price levels for different markets and their segments.

Price leader strategy involves either the company correlating its price level with the movement and nature of prices of the leading company in a given market for a specific product (depending on the firm’s place in the market and the size of its market share, this may be leader No. 1, leader No. 2, leader No. 3), or concluding an agreement (usually unspoken) with the leader in a given market or its segment, i.e. If the leader changes the price, the firm also makes a corresponding change in the prices of its goods.

Such a pricing strategy is outwardly very attractive and convenient for firms that do not want or do not have the opportunity to develop their own pricing strategy, but it is also dangerous: by excessively constraining the firm’s pricing initiative, it can lead to serious errors and miscalculations (for example, the leader used an erroneous strategy or made a deceptive move, etc.).

Competitive pricing strategy is associated with the implementation of an aggressive pricing policy by competing firms - with their lowering prices and suggests for a given firm the possibility of implementing two types of pricing strategy in order to strengthen its monopoly position in the market and expand its market share, as well as in order to maintain the rate of profit from sales.

In the first case, the seller also carries out a price attack on its competitors and reduces the price to the same or even lower level, trying not to lose, but, on the contrary, to increase its market share.

Reducing prices has an effect on markets and its segments that are characterized by high elasticity of demand. The basis for reducing prices is to reduce production and distribution costs. This strategy is also used effectively for those markets in which it is extremely dangerous to lose share.

In the second case, the selling company does not change prices, despite the fact that competing firms have reduced prices, as a result of which the rate of profit from sales for it is maintained, but there is a gradual loss of market share.

This pricing strategy is used in markets with low elasticity of demand, where there is no sharply negative reaction from buyers regarding maintaining a high price level and some infringement of their financial interests when purchasing, where competing firms are small and it is difficult for them to allocate capital investments to expand production, when prices decline can lead to a significant loss of profits and when this selling company has confidence that it is able to restore lost positions in the market due to its high prestige among buyers.

Prestige pricing strategy provides for the sale of goods at high prices and is designed for market segments that pay special attention to the quality of the product and brand and have low elasticity of demand, as well as being sensitive to the prestige factor, i.e. consumers do not purchase goods or services at prices they consider too low.

The prestige pricing strategy is possible in the case of high prestige of the company and its products, as well as minimal competition, with constant or increasing relative costs of production and sales as sales proceed.

The prestigious price strategy, like standard prices and unrounded prices, belongs to the group of pricing strategies based on psychological pricing.

Unrounded price strategy provides for setting prices below round figures. Buyers perceive such prices as evidence of the company's careful analysis of its prices and the desire to set them at a minimum level. In addition, buyers, when receiving change, perceive such prices as lower or reduced. If a consumer intends to buy a product at a price of no more than 20 rubles, then he will buy it for 19 rubles. 95 kopecks the same as for 19 rubles, since the price is in the digital interval specified by him.

Bulk Pricing Strategy involves selling a product at a discount if it is purchased in large quantities. This strategy is effective if one can expect an immediate significant increase in purchases, an increase in the consumption of goods, attracting the attention of buyers of competing companies to the product, and solving the problem of clearing warehouses of outdated, poorly selling goods.

Strategy of closely linking price levels with product quality provides for setting prices at a high level, corresponding to the high level of product quality and the image formed by the company among buyers in relation to its products.

In trading practice, pricing strategies are not used separately by their types, but in combination, when one type is superimposed on others. Thus, the strategy of differentiated prices is used together with the strategy of “cream skimming” and unrounded prices, and so on. For example, the Japanese company “Sony” has a differentiated price schedule for various buyers: domestic or foreign, permanent or new, using purchased goods in Japan or exporting them abroad, etc., and at the same time changes the price level depending on from the stage of the product life cycle: at the introduction stage, the product is sold at the highest prices, and at the stage of exit from the market - at the lowest. All these prices are usually expressed in non-round numbers: 198 thousand yen, 1.98 thousand yen, etc.

An enterprise's pricing policy is the basis for developing its pricing strategy. Pricing strategies are part of the overall development strategy of the enterprise.
A pricing strategy is a set of practical factors and methods that are advisable to adhere to when setting market prices for specific types of products manufactured by an enterprise.
The main types of pricing strategies are:

High Price Strategy

The goal of this strategy is to obtain excess profits by “skimming the cream” from those buyers for whom the new product is of great value and who are willing to pay more than the normal market price for the purchased product. The high price strategy is used when the company is convinced that there is a circle of buyers who will demand an expensive product. This applies, firstly, to new goods appearing on the market for the first time, protected by a patent, and having no analogues, i.e. to goods that are at the initial stage of the “life cycle”.
Secondly, for goods aimed at wealthy buyers who are interested in the quality and uniqueness of the product, i.e., at a market segment where demand does not depend on price dynamics.
Thirdly, to new products for which the company does not have the prospect of long-term mass sales, including due to the lack of necessary capacities.
A high-price strategy is justified in cases where there is a guarantee that there will be no noticeable competition in the market in the near future, when the costs of developing a new market are too high for competitors, when raw materials, materials, and components for the production of a new product are available in limited quantities, when sales are difficult new products.
The pricing policy during the period of high prices is to maximize profits until the market for new goods becomes the object of competition.
The high price strategy is also used by the company for the purpose of testing its product, its price, and gradually approaching an acceptable price level.

Mid-price strategy (neutral pricing)

Applicable in all phases of the life cycle except decline, and is most typical for most firms that consider profit making as a long-term policy. Many companies consider this strategy to be the fairest, since it eliminates “price wars”, does not lead to the emergence of new competitors, and makes it possible to receive a fair return on invested capital. Foreign, large and super-large corporations in most cases are content with 8-10% of share capital.

Low price strategy (price breakout strategy)

The strategy can be applied at any phase of the life cycle. Particularly effective when price elasticity of demand is high. Applicable in the following cases:

in order to penetrate the market, increase the market share of their product (policy of exclusion, policy of exclusion). This option is appropriate if costs per unit are falling rapidly as sales volume increases. Low prices do not encourage competitors to create similar products, since in such a situation they provide low profits;
in order to reload production capacity;

-to avoid bankruptcy.
The low-price strategy aims to achieve long-term, rather than “quick” profits.

Target Price Strategy

With this strategy, no matter how prices, sales volumes change, the amount of profit must remain constant, i.e. profit is the target value. Mainly used by large corporations.

Preferential pricing strategy

Its goal is to increase sales. It is used at the end of the product life cycle and manifests itself in the application of various discounts.

Linked pricing strategy

When using this strategy, when setting prices, they are guided by the so-called consumption price, equal to the sum of the price of the product and the costs of its operation.

“follow the leader” strategy

The essence of this strategy does not involve setting prices for new products in strict accordance with the price level of the leading company in the market. We are only talking about taking into account the pricing policy of the leader in the industry or market. The price of a new product may deviate from the price of the leading company, but within certain limits, which are dictated by quality and technical superiority.
The fewer differences in a company's new products compared to most products offered on the market, the closer the price level for new products is to the prices set by the industry leader. There are other conditions that determine the need to use leader prices.

So, if an enterprise acts as a relatively small (in terms of market share or sales volume of a given type of product) manufacturer on the market, then it is best for it to set prices by analogy with the prices for products of leading companies in the industry. Otherwise, large manufacturers will be forced to declare a “price war” and push the outsider enterprise out of the market.
The following strategies are less commonly used:

constant prices, when an enterprise strives to establish and maintain constant prices over a long period, and since production costs increase or may increase, instead of revising prices, enterprises reduce the size of the package and change the composition of the product. For example, you can reduce the weight of a loaf of bread, but leave the price unchanged. The consumer prefers such changes to price increases;
unrounded, or psychological, prices are, as a rule, reduced prices against some round amount. For example, not 10 thousand rubles, but 9995 rubles. or 9999 rub. Consumers get the impression that the company carefully analyzes its prices and sets them at a minimum level. They like to receive change;
price lines - this strategy reflects a price range, where each price shows a certain level of quality of the product of the same name. In this case, two decisions are made:
the range of supply prices is determined - upper and lower limits;
Specific prices are set within this range. The range can be defined as low, medium and high.

From time to time, businesses feel the need to change prices for their products. Price reductions can occur for the following reasons: underutilization of production capacity, reduction of market share under the influence of strong competition, or the desire of the enterprise to achieve a dominant position in the market.
It should be noted that consumers may view this as an upcoming replacement of the product with a new one; poor quality of goods; financial distress of the enterprise; a sign that the price will decrease again and you should not rush to buy.
Price increases usually occur due to persistent inflation or excess demand. Price increases can be interpreted by buyers in both a positive and negative sense. In the first case, the buyer assumes that the product has become especially popular or is of particular importance, therefore, it must be bought before it becomes unavailable. In the second, the seller seeks to set a price at which the product can enter the market.
Naturally, the reaction of consumers to price changes should be taken into account by enterprises.
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The actions of a competitor when the price of an enterprise changes depends on the number of sellers of a given product, its financial situation, market sensitivity to price changes, dynamics of production and distribution costs, etc. Competitors will react most actively in cases where the number of sellers is small and their products are similar among themselves, and buyers are well informed. At the same time, the enterprise needs to decide on the following question: what will be its reverse reaction when competitors’ prices change.

Pricing strategy enterprises are united by a set of long-term agreed provisions that determine the formation of market prices in the interests of ensuring sales. Usually, according to an established strategy, the most important decisions are made that entail long-term consequences for the development of the enterprise. Pricing tactics are a system of specific tactical measures aimed at managing prices for an enterprise’s products and services in the short term.

A pricing strategy is a model of company behavior planned for the long term, the main goal of which is the successful sale of goods or services. This is carried out mainly by choosing the order of prices, as well as through other decisions. Pricing strategies are:

Traditional.
Pricing strategies for assortment pricing.
Pricing strategies for differentiated pricing.
Competitive pricing strategies.

Pricing tactics are certain actions relating to a short period of time, aimed at regulating the cost of goods or services. These actions (discounts, allowances, promotions and others) include managing consumer behavior, changing costs, but their overall goal is to achieve the planned results.

6 pricing strategies that Western companies successfully use

The editors of the General Director magazine reviewed innovative pricing methods that Western companies either already use or may use in the near future.

Classic Pricing Strategies You Need to Know

High price strategy. This pricing strategy involves achieving excess profits for the enterprise (“cream skimming”), generating income from buyers for whom the new product is of great value and who are willing to pay a high price. This pricing strategy is used when the company is convinced that there is demand for expensive products.

This strategy is typical for the market situation in the following cases:

when selling new products without analogues protected by patents;
low elasticity of demand;
if demand is higher than supply;
there is a market segment for which demand does not depend on price dynamics;
limited competition.

Average price strategy (neutral pricing). This pricing strategy is applicable at all phases of the life cycle, with the exception of the warehouse. It is most typical of most companies that consider making a profit as their long-term policy. According to many businessmen, this is the fairest pricing strategy, because:

“price war” is excluded;
pricing strategy does not allow companies to make money at the expense of customers;
the pricing strategy does not lead to the emergence of new competitors;
The pricing strategy allows you to receive a fair return on invested funds.

Low price strategy (price breakout strategy). This pricing strategy can be applied at any stage of the life cycle. It is especially effective in conditions of high price elasticity of demand. The use of this pricing strategy is intended for the following cases:

to penetrate the market, increase the share of its products (displacement policy). This method would be appropriate if per unit of production costs decrease with increasing sales volume. low prices will encourage competitors to develop similar products, since in this situation they provide low profits.
to prevent bankruptcy.
to relieve the production capacity of the enterprise.

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Target price strategy. This pricing strategy assumes that the level of sales and the amount of profit, regardless of price changes, should be constant. Therefore, profit acts as a target value. This pricing strategy is mainly used by large corporations.

Preferential pricing strategies. Preferential tariffs are established for consumers who are important to the company, or due to administrative intervention. The goal of this pricing strategy is to stimulate sales to certain customers by undermining weak competitors, meeting government regulations, and freeing up warehouse space.

Price leader strategy. This pricing strategy does not imply setting prices for new products according to the price level of the leading enterprise in the market. We are talking about taking into account the pricing policy of the industry leader or the market. The price of a new product may differ from the tariffs of the leading company, but within certain limits dictated by technical and quality superiority.

Contract pricing strategy. A contract concluded for a certain period fixes the terms of delivery or sale if the future market situation is uncertain, although significant changes are envisaged or not excluded that may affect the profitability of the enterprise. This is a rather risky pricing strategy, but if the forecasts are confirmed, it allows you to obtain significant profits for the enterprise.

Competitive pricing strategy. A price war is waged with competitors, bringing low prices in the market. Also, the use of this pricing strategy is possible to ensure profit from sales. The company in this case does not change prices when competitors do this in order to maintain profit margins, even if it loses market share. This option is used when a reduction in prices results in a sharp reduction in the enterprise’s income, and if the company itself is confident in its ability to restore its market position.

Constant price strategy. The company strives to set and maintain constant prices for a sufficiently long period. When production costs rise, the company does not revise prices, but makes changes to the product composition or packaging to save money.

Unrounded price strategy. Prices are set at less rounded values. This is a psychological technique, however, it gives buyers the feeling that the company has carried out a thorough analysis of prices, setting them at a minimum level. In addition, they like to receive change.

You will be taught how to choose a pricing strategy taking into account market conditions in the School course. general director.

Differential pricing strategy

1. Periodic discount pricing strategy based on different consumer preferences, with buyers classified into groups.

This type of strategy is successfully implemented when there is a decrease in consumer demand over time, for example, out of season. The main feature of this strategy is that consumers always know at what time it will be applied.

Example. The company has two options for selling its products, but you need to choose one: if the cost is 85 thousand rubles per position, then you will be able to sell 25 positions; if 65 thousand rubles - only 50. Thus, if the price decreases, then the sales volume increases.

The company's products attract 50 consumers, of which 50% of people want to buy these products only in the first days of each time period. Moreover, they are ready to make a deal even if they purchase one position for 85 thousand rubles. The remaining 50% want to purchase one position at a price no higher than 65 thousand rubles per position, and they do not care at what time.

At what cost should the company sell goods?

At first glance, the conclusion suggests itself that this company will not be able to profitably sell its product, since the cost of the product is higher than half of consumers are willing to spend on it. But there is an excellent way out of this situation - to sell goods using the different nature of consumer demand, that is, implementing a strategy of periodic discounts.

Then, at a cost of 85 thousand rubles per position, there will be absolute satisfaction of consumers who need to buy only in the first days, and the second group of buyers, who want to buy cheaper than 65 thousand rubles, in this case will be left with nothing. The income will be 2.125 thousand rubles (25 * 85,000).

But the most ideal development would be in which the company initially sells half of the goods for 85 thousand rubles per item, and after that it will gradually reduce the cost to 65 thousand rubles.

It turns out that the company sells part of the products to those who absolutely need to buy in the first days of the period, and sells the rest of the goods to those who are not ready to overpay for urgency. Thus, the average selling price of one item will be 75 thousand rubles.

The above-described pricing strategy takes place in real life: stylish goods out of season, prices for housing and communal services during peak traffic, tickets for performances taking place during daylight hours, tours out of season, and so on. The same price reduction rules apply when it comes to older models. And vice versa - prices rise if the product runs out, if the product has been modernized, etc. The main feature of this strategy is that consumers always know at what time it will be applied.

2. Random discount pricing strategy(variable pricing) is based on search costs, which motivate the random discount.

Example. The company can afford to sell one product item for no less than 60 thousand rubles. On the market, these products cost from 60 thousand rubles to 80 thousand rubles, while people are ready to buy this product for no more than 80 thousand rubles. To purchase products at the lowest price, that is, for 60 thousand rubles, you need to spend 60 minutes of your time. In the case when the consumer does not waste time, but buys from the first one he comes across, then there is a low probability that he will buy for 60 thousand rubles or 80 thousand rubles, and most likely, the price will be between these figures.
Let’s take a value from 0 to 20 thousand rubles as the cost at which the consumer is willing to estimate 60 minutes of his time. Then, let’s assume that a person who does not spend time searching buys on average one unit of product for 70 thousand rubles, and the one who spends it buys it for 60 thousand rubles, that is, the average savings is equal to 10 thousand rubles. It turns out that the products will be purchased by consumers who value the time spent at less than 10 thousand rubles.

Let's assume that some consumers spend their time searching, while others buy the first thing they come across. In this case, what strategy should a company follow, whose product cost is 60 thousand rubles?

In this situation, the company needs to use a strategy that will maximize the number of consumers who know about the low price, and those who do not know, and therefore buy at the highest.

Thus, it is necessary that the cost decreases according to a random principle: first the price is set at 80 thousand rubles, and then there is a gradual decrease to 60 thousand rubles. That is, for those who do not have information, discounts should be random and rare, in which case they will buy goods at random (usually expensive), since they will never be able to guess the low price a second time.

Those consumers who have information about the price order will wait for the moment when the cost of the product drops to the minimum price, and then they will make a purchase. From the above it follows that the main condition for the pricing strategy of random discounts is not the same search costs. The majority of consumers are informed about the differences in prices, but for some of them who earn well, this does not matter - time is more expensive, but for the rest - the opposite.

3. Discount pricing strategy in the second market– based on characteristic features fixed and variable expenses.

Example. The company sells 110 product items for 22 thousand rubles per piece. Variable costs are equal to 7.7 thousand rubles per item, and fixed costs are 3.3 thousand rubles for 220 product items.

Discount pricing strategy in the second market is based on the characteristics of variable and fixed costs of the transaction. The company wants to enter new market, but save absolutely all of its positions on the old one, while its production capacity makes it possible to increase production by 220 product positions.

What is the minimum price at which the company can sell its products? If we take a new market, then the benefit will be received if the cost of sales is greater than the sum of variable costs, that is, more than 7.7 thousand rubles. It turns out that the old market provides external savings for the new one, since it takes on the constant costs of products.

Thus, the company can afford to sell products in a new market at a minimal price. The best price for a new market should be chosen based on the existing supply and demand in it.

This pricing strategy is most effective in foreign markets, when selling generic products, when interacting with certain social groups, and in some other situations. For example, new generic drugs compete with older, more expensive and patented ones. Here the company must choose: work with old drugs and lose a certain number of customers, or choose new ones, lose a little profit, but significantly increase the number of consumers.

The optimal strategy in this case would be a mixed choice of prices for old and new drugs.

Correct pricing: how to set a price and earn more

Competitive Pricing Strategies

1. Geographic pricing strategy is among the strategies related to price formation as a result of competition.

Example. Let's consider several markets: A and B. Let there be 20 consumers each, and each is ready to buy one unit of product for 60 thousand rubles. Let's assume that to purchase products at a nearby market you will have to spend 20 thousand rubles on travel.

A company operating in market A has a task: it can sell one unit of its products for no less than 50 thousand rubles with a total sales volume of 20 units. If the volume is equal to 40 units, then the cost of one unit of production can be reduced to 30 thousand rubles. To deliver products to market B, you need to spend 10 thousand rubles, while the cost of producing the same products in market B is higher.

The company needs to create 40 units of products and sell them on any market for no less than 40 thousand rubles per unit. In order to avoid competition, the organization must make the average cost for one unit of goods in both markets 40 thousand rubles. But, based on the competitive conditions in market B, the company can choose how to determine the cost of products in the markets.

In the case where the cost of competitors in market B will be more than 50 thousand rubles per unit, it is advisable for the company to sell a unit of product for 30 thousand rubles in market A and for 50 thousand rubles in market B. As a result of the fact that the average cost will be be minimal, competitors will not be afraid. This strategy is often used abroad and is called “FOB” (from English “freedom on board”).

In the case when the cost per unit of product from competitors is more than 40 thousand rubles, it is advisable for the company to sell products in both markets for 40 thousand rubles per unit of product, and the result will be the same. This cost appears as a result of adding a price satisfactory for the company of 30 thousand rubles (for the production of 40 pieces) and average delivery costs (10 thousand rubles). This pricing strategy is called “single destination price.”

2. Pricing strategy for market penetration is based on taking into account the cost of a company's goods or services in comparison with similar goods or services from other companies. Such a pricing strategy is needed so that the company can strengthen its existing positions in the market, as well as attract new, promising products.

Example. The company reduces the price of its products from time to time. The lowest price is 50 thousand rubles, while 40 units of products are produced. It turns out that any company that can afford the same numbers can easily start trading in this market.

What pricing strategy should the company use?

In order not to leave this market, the company needs to sell its products to consumers at a price of 30 thousand rubles per piece. This situation is real if the organization not only increases its production capacity, but also reduces the cost of manufacturing its goods.

Such a pricing strategy is needed in order to strengthen existing positions in the market, as well as attract new, promising products. It is constantly used in reality, for example, many business owners unite in order to significantly reduce prices and eliminate various kinds of speculators and unscrupulous sellers from their market.

Another example of applying the above strategy is limit price formation. In this case, companies set a price for their goods/services that barely exceeds production costs. Such steps prevent young firms from entering their market and competing.

3. Price signaling strategy is based on the company’s use of a pricing mechanism in accordance with the requirements of competition, based on consumer trust.

This type of strategy usually takes place in the case of interaction with newly emerging consumers or those who do not have real information about the price of products, but understand the importance of product quality.

Example. Companies manufacture products of two different quality options, with the lowest cost of low-quality products being 20 thousand rubles per piece, and the lowest cost of high-quality products being 40 thousand rubles. In order not to lose the trust of customers, one company produces only good quality products and can afford to sell them from 20 thousand rubles to 40 thousand rubles per piece.

Based on this, consumers will quickly understand (learn from a conversation or look at prices) what the minimum cost for this product is, but to understand the degree of quality, they need to spend 60 minutes on it.

Suppose that consumers are classified in terms of the value of personal time in the same way as in the example regarding the random discount strategy.

What pricing strategy should the company use, and what spending strategy will consumers choose?

In this case, there are three possible pricing paths that companies can take, but in none of them will the organization sell high-quality products for less than 40 thousand rubles per piece:

1. Engage in the sale of low-quality products at a price of 40 thousand rubles per piece, based on the fact that many consumers cannot assess the degree of quality.

2. Engage in the sale of low-quality products at a price of 20 thousand rubles per piece.

3. Engage in the sale of high quality products at a price of 40 thousand rubles per piece.

In turn, consumers also have the opportunity to take three different paths when choosing a product purchasing strategy. People who do not value their own time too much will conduct a thorough underwriting of this market for quality and ultimately purchase 1 unit of high-quality products at a price of 40 thousand rubles.

Consumers who value their time greatly and are not willing to spend it studying this market will play roulette, that is, they can simply purchase products at the minimum price or purchase products at the maximum cost, expecting that it will be of high quality.

4. Pricing strategy according to the absorption curve includes mainly the benefits of the company's experience and production costs, which are lower than those of competitors.

When this strategy is implemented, consumers who bought the product in the initial time period have a price advantage over those buyers who did so later. This is due to the fact that at the initial stage, buyers purchase products at a cost significantly less than what they were originally set on.

Example. There is a market in which there is healthy competition between companies called X, Y, Z and F, while these companies produce the same goods, in the same quantity (200 pieces each) and in the same time. The only difference is that company X has more experience than the others, which means it spends less on the production of one product than others, namely 2 thousand rubles. Today, in the described market, the price for one product has been set at 4 thousand rubles. At the same time, buyers are very sensitive to prices and react extremely slowly to any innovations.

What pricing strategy should Company X adopt?

It should be remembered that company X has a higher profit than companies Y, Z and F, so a good option for this company would be an option in which the cost of the product would be extremely aggressive (up to 2 thousand rubles per piece). With such a development of events, the bankruptcy of all other companies would follow, which means that company X would no longer have competitors. Then this company will take over all the clients of the three companies that left the market, which means it will significantly increase production and sales volumes.

In this case, the cost of producing one unit of output will become even lower, and, due to the decrease in cost, there will be more consumers and they will make more purchases. All this will bring company X a huge amount of money, since only it has advantages; there is no point in other companies starting to play in the market with prices.

Successful application of such a strategy is only possible when the company has serious experience and consumer dependence on the order of cost of the product/service. As a rule, the above aspects take place at the initial stage of development of the production of products that are not essential items, but which use a long period of time.

In this situation, all sellers will be set up to successfully carry out trading activities for the long term. It is important to understand the difference between market penetration pricing strategies and learning curve pricing strategies. These strategies are similar, but the definition of product costs and costs differs.

Pricing strategies for assortment pricing

1. Pricing strategy “Image”- This is a situation in which consumers strive for product quality, but at the same time consider the cost of interchangeable products.

When this strategy is implemented, the company introduces to the market products similar to those already offered, but under a different name and at a higher cost. This step seems to say that this product has better quality. This pricing strategy occupies a middle position between above-par value and signaling, taking from the former an approach to customer needs and from the latter an attitude to costs.

As a result, the company, with the help of a new, more expensive product, communicates high quality to consumers, and invests the income received in the production of cheaper similar products.

2. Pricing strategy “Set”- This is a situation where there is different demand for identical products. This pricing strategy allows you to sell more products, and this happens due to the fact that the cost of this particular product is less than all other products in this segment.

Example. A company sells two products: product A and product B in a market in which they have their own customers. Let's call them consumer 1 and consumer 2.

The highest cost that consumers are willing to pay is:

What pricing strategy will be optimal, provided that aggressive play with prices is prohibited, and one of the consumer groups cannot sell both goods at inflated prices?

The most profitable option would be to sell product A for 16 thousand rubles, and product B for 14 thousand rubles, that is, it will be 30 thousand rubles, and the total income will be equal to 60 thousand rubles. It turns out that consumer 2 will buy both goods for no more than 37 thousand rubles, and consumer 1 – no more than 30 thousand rubles.

As a result, both groups of consumers will take the set for 30 thousand rubles, which means the company will receive maximum profit.

3. Pricing strategy “Above par” is implemented if there is an opportunity to earn even more by increasing the volume of products produced, and at the same time the demand in the market is uneven.

Example. The company can sell its products on average no cheaper than 30 thousand rubles per piece with a volume of 40 units, and no less than 60 thousand rubles with a volume of 20 units. To introduce improved products to the market, you need to spend another 10 thousand rubles, since 40 consumers are interested in such products. At the same time, 20 of them are ready to spend up to 60 thousand rubles on one unit; quality is very important to them, and the remaining 20 people can afford to buy one unit of product for a maximum of 25 thousand rubles, while they will be completely satisfied with the basic configuration of the product.

At what cost and what products (regular or improved) should the company sell?

The best way out of the situation would be to use prices that are higher than nominal, but based on the heterogeneity of consumer desires. That is, the company needs to create 40 units of products, of which half are the basic model, and the other half are improved. It is recommended to sell the first at a price of 25 thousand rubles per piece, and the second - no cheaper than 42 thousand rubles.

In this case, this strategy will bring good profits to the company and protect it from competitors. The company will make a loss from the sale of cheap products, but will compensate for this and remain in the black by selling an expensive product model.

4. “Kit” pricing strategy is that consumers evaluate the same products completely differently.

Using this type of strategy, when choosing the minimum price for which a product can be sold, the company should take into account future decreases in profits and the likelihood that consumers will not buy additional products.

Example. The company manufactures products for long-term use (36 months) and sells them at a minimum cost of 100 thousand rubles per piece. To use this product for all 3 years, you still need to buy 500 rubles worth of products monthly. But the majority of consumers want to buy goods no more expensive than 50 thousand rubles, but at the same time they are ready to buy additional products every month for an amount not exceeding 2 thousand rubles.

Let’s imagine that all these consumers will actually buy products worth 2 thousand rubles every month, and the percentage reduction in the company’s future profit is zero.

What pricing strategy should the company then adopt?

With this development of events, the company can sell its main products not for 100 thousand rubles, but for 50 thousand rubles, given that 2 thousand rubles worth of additional products are sold monthly. Then general additional income for 36 months will be equal to 54 thousand rubles (36 * 1.5), and this will compensate for losses when selling the main products for 50 thousand rubles, and not for 100 thousand rubles.

But we should not forget that there is a possibility that some consumers will not purchase additional products every month, and another option is also possible when, on the contrary, more additional products will be purchased than the company initially planned. And there may also be a development in which the main products will be used not for 3 years, but more, and accordingly, additional products will be purchased monthly. Therefore, this pricing strategy is also called “bait”.

3 prohibited pricing strategies

Monopolistic pricing. It involves establishing and maintaining a monopolistically high cost, usually with the aim of obtaining excess profits.

Dumping prices are significantly reduced prices in order to gain advantages over competitors.

Pricing strategies based on collusion between entities that limit competition.

A practitioner tells

Dmitry Dmitriev, director of marketing communications at Leroy Merlin Vostok

Our entire network operates according to the “low prices every day” strategy. We analyzed the success of this model in retail different countries and came to the conclusion that it needs to be implemented in domestic practice.

At the initial stages, it was not easy to work with suppliers, explaining the principles of this concept. But now, due to the effectiveness of the chosen approach, we can implement our mission faster than others and quite successfully on the principle of “making home repairs and improvement accessible to everyone.”

Every month, in all the cities in which our stores are represented, we conduct checks: is the name of our company associated with consumers with an image of low prices? We ask customers: “Where, in your opinion, are the lowest prices for goods for home repair and improvement?” , we suggest choosing a brand from an extensive list of market participants.

Factors influencing the choice of pricing strategy

Businesses have to face many constraints when developing a pricing strategy. Their relative elasticity may change over time. There are three large groups of factors influencing the pricing strategy of an enterprise:

Factors that are related to the company itself, including tasks, goals, internal performance indicators, nature of the business, etc.
Environmental factors.
Other elements of marketing

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Skimming strategy

Skimming pricing strategy is a competitive pricing marketing strategy that involves setting a deliberately high price for a new product. An inflated price is necessary to obtain super-profits, which in a short time recoup the investments spent on the development, production and launch of the product on the market.

When choosing a “skimming” strategy, do not forget to reflect in your marketing plan the price that you plan to reach in the long term and plan the stages and conditions for a gradual reduction in the cost of the product.

There are four reasons why a company might decide to use a skimming pricing strategy: high initial costs, unique benefits, limited production capacity, and inelastic demand for the product.

High initial costs

If large resources were spent on the development of a product, only excess profits will ensure that they are repaid in the shortest possible time. If, at the stage of development of a high-cost product, there is no confidence in the possibility of setting inflated prices, it is better to close such a project or postpone it until “better” times.

Unique properties of the product

A product with unique advantages may be sold at an inflated price, since it has no direct analogues. This is why the skimming strategy is often used by all new technological products, new computer technologies, and new drugs. In such a situation, the important point is the long-term protection of the product's competitive advantage.

Patents, a complex production cycle, unique personnel, and a unique, difficult-to-repeat company business model will allow you to protect the sustainability of your competitive advantage. A high price can be justified by the consumer if the product provides unique benefits and has unique characteristics for which the consumer is willing to overpay.

Example of unique characteristics: a completely new product that creates a new market without competitors (Ipad); a product with unique properties, which is a new generation in the existing market; a product that satisfies existing needs better, more efficiently, with better quality, faster.

In fact, the consumer may not be satisfied with the cost of the product, but the desire to acquire unique benefits forces him to overpay for the product. In this case, when worthy substitute products with a lower price appear, an instant switch will occur.

Limited capacity

Limited production capacity or high demand is another reason to use this type of pricing strategy. By inflating prices, the company reduces the purchasing power of the market. If during the first months of sales it is predicted that demand will exceed supply, then an inflated price is the only way to get maximum profit from sales.

Inelastic demand

Inelastic demand means low sensitivity of the buyer to the cost of the product. At any price, the product will enjoy the same level of demand. Undoubtedly, there is always a price limit for the inelasticity of demand, but if there is a large corridor of the cost of a product in which demand remains at the same value, the maximum price of the “cost corridor” is always set.

Market penetration strategy

A market penetration pricing strategy involves setting a deliberately low price for a new product. The goal of this strategy is to create market recognition, ensure the necessary level of trial purchases, maximize sales in the short term and achieve a high market share. When choosing a penetration strategy, it is necessary to reflect in the marketing strategy the price that is planned to be reached in the long term and plan the stages and conditions for a gradual increase in prices.

Terms of use of the strategy

In practice, there are 5 reasons on the basis of which a company may decide to use a segment penetration strategy when approving a pricing strategy: highly elastic demand, low initial costs, high reaction speed from competitors, economies of scale in the absence of restrictions on production capacity .

Highly elastic demand

A pricing market penetration strategy works best in an industry in which consumers are price-sensitive and therefore willing to switch to lower-cost product options at any time.

Low start-up costs

The low level of R&D costs and initial marketing expenses allows, even with a low cost of the product, to recoup expenses in a short time and reach the required level of profit.

High reaction speed from competitors

In markets where competitors can quickly respond to the company's actions, it is advisable to use a market penetration pricing strategy. The ability of competitors to quickly react to the release of a product is possible under the following conditions: the lack of uniqueness of the product, the ease of copying properties, the inability to protect the unique properties of the product.

Economies of scale

Economies of scale and competitive cost structure are one of the main reasons for using an industry penetration strategy. But you should always remember that such a strategy can lead to retaliatory measures of price reductions from competitors and the outbreak of price wars. Therefore, a company choosing this strategy must be able to survive periods of low profit or have the competitive advantage of producing a product at a low price.

No capacity limitations

The penetration strategy can ensure the achievement of high market share and high growing stable sales. The company, if unable to meet demand in the long term, will suffer losses in terms of lost profits.