Competitor based pricing strategy how to#
How to develop effective pricing strategies for your export product Pricing your export product can be difficult, but the right knowledge and guidance will help you get the right value for the product.These are the four basic strategies, variations of which are used in the industry. Example: the earliest prices for mobile phones, VCRs and other electronic items where a few players ruled attracted lower cost Asian players. The idea is to recover maximum money before the product or segment attracts more competitors who will lower profits for all concerned. Skimming strategy: high price is charged for a product till such time as competitors allow after which prices can be dropped. Example: Friendly wash detergents Nirma local tea producers. Targets the mass market and high market share. Margins are wafer thin overheads like marketing and advertising costs are very low. Example: Mobile phone rates in India housing loans etc.Įconomy pricing: no-frills price. It is understood that prices will be raised once the promotion period is over and market share objectives are achieved. This is done when a new product is being launched. Penetration pricing: price is set artificially low to gain market share quickly. Example: Porche in cars and Gillette in blades. Such pricing strategies work in segments and industries where a strong competitive advantage exists for the company. Premium pricing: high price is used as a defining criterion. It is targeted at the defined customers and against competitors.ĭescription: There are several pricing strategies: A pricing strategy takes into account segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst others.
Definition: 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.
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