Article Side

Online Article Directory!

Hello Guest! Login or Register to submit articles!

Various pricing strategies adopted by companies to improve sales

By Annphilip Subscribe to RSS | March 8th 2012 | Views:
loading
 
  



Along with product, place and promotion, pricing in an important factor to consider while we develop marketing strategies. Those companies that find right price point at right place and right time will achieve success in the sales of their products.

Pricing strategy depends on both the external factors and the internal factors of an organization. Some of the factors that impact pricing are demand curve of the product, cost involved and pricing decisions of competitors. Companies adopt a variety of pricing strategies based on its marketing goals and objectives. Some of the pricing strategies include -

Premium pricing – In this type of pricing strategy the price of a product will be higher than the competitors. The companies that introduce new products in the market will follow this strategy. This method of pricing can be effective when the product has got any unique feature, or if it is the first of that kind introduced in the market. Some companies use this method if the product has got any additional features than its competitor’s product. Premium pricing helps companies to maximize the profit in the introductory stage of the product life cycle. When the introductory phase is over, certain companies lower the price to retain the demand of the product.

Penetration pricing – As per this strategy, companies introduce products with a low price relative to the competitor’s price. Companies adopt penetration pricing strategy to maximize their market share. This type of pricing strategy will try to utilize the customers general mind set. The middle class consumers always go for products that have lower price. Some customers will think about buying a new product because it is cheap. Even though penetration pricing can cause a loss to the company in the initial stage, the hope is that it will generate more sales in the future. As people who buy the product will definitely explain its pro and cons to their neighbors or relatives, this helps in a word-of-mouth advertisement.

Economy pricing- This type of pricing strategy is followed by companies like Wal-mart. To attract more customers they price certain products in a reasonably low range. Most of the companies adopt this type of pricing strategy just to improve the sales of the products. The renowned food store, Adli is an example of economy pricing strategy.

Price skimming – Companies that had already established goodwill can adopt this pricing strategy. Generally people will think that costly products will be good in quality. Most companies price their products above the general profit level to maximize the revenue before other competitors begin offering similar products or product alternatives. Price skimming strategy can be initiated in the initial stage of the product life cycle. When similar products from other competitors enter into markets, the demand of the product can be increased by reducing the price. Thus price skimming strategy can give advantage to a business in two ways.

Psychological Pricing – There are certain price points where people are willing to buy a product. If the price of a product is $100 and the company prices it as $99, then it is called psychological pricing. In most of the consumers mind $99 is psychologically ‘less’ than $100. A minor distinction in pricing can make a big difference is sales. The company that succeeds in finding psychological price points can improve sales and maximize revenue.

Though advertising and promotional activities can effectively spread information about the product, it’s the price of the product and the quality of the service that determines the sales. If the customer is satisfied with the price and quality, then he will become a regular customer and sometimes make others to buy the product. Online shopping on home computer with connection from providers like Time Warner Internet can offer you products at competitive prices.

Annphilip - About Author:
As a freelancer, Ann is interested in scribbling on various factors that contribute to improved sales. She enjoys online shopping. Ann browses her home computer connected to Time Warner Internet to buy home accesories at competitive prices.

Share on Facebook Tweet It Stumbleupon this post This post is delicious !

Article Source:
http://www.articleside.com/business-articles/various-pricing-strategies-adopted-by-companies-to-improve-sales.htm

Related Business Articles Subscribe to RSS

Part-time Job - an Effective Way of Earning Income and being Responsible
Published by Mark Bennett on February 16th 2012 | Business
Having a part-time job will institute positive thinking. It gives your child a sense of responsibili...
 
Is this a good time to switch electricity providers?
Published by ShopTexasElectricity on February 17th 2012 | Business
In energy deregulated market such as that in Texas, switching providers can give you the best electr...
 
As one of the foremost letting agents Yorkshire Dee Atkinson-Harrison can get you housed in no time
Published by James Blee on July 20th 2012 | Business
Alternatively, if you’re looking for a charming property steeped in history and character then the...
 
Why stay out of fashion, it easy now to cure your nails for long time
Published by Roger Lopez on April 20th 2012 | Business
UV nail gels are easy to apply and used as nail applications. These are meant to be durable and acry...
 
Shopping online with Horizonfitness.com coupon is a wonderful experience that saves time and money
Published by Gayathri Devi on February 22nd 2012 | Business
People can enjoy amazing savings on their shopping expenses by going for online shopping. The online...
 
It is time to hire professional packing and moving companies
Published by Kumari Ankita on January 19th 2012 | Business
Packing from one city to another is the most daunting task we ever have. Fast pace life never allows...
 
Biscuit 'big brother' - asset tracking saves time, money and the environment
Published by Netta Maistro on August 20th 2012 | Business
Whilst wandering through the aisles of your local supermarket, you're tracked by a silent host of CC...
 
Points to consider at the time of storage container hire
Published by Andrew Watson on December 23rd 2011 | Business
In present time there are a number of people around the globe who suffer from anxiety and stress rel...
 
Biscuit 'big brother' - asset tracking saves time, money and the environment
Published by Netta Maistro on August 20th 2012 | Business
Whilst wandering through the aisles of your local supermarket, you're tracked by a silent host of CC...
 
So much police gear, so little time
Published by Thomasgalvin on January 30th 2012 | Business
Due to economic conditions over the past several years, most city, state and federal law enforcement...
 
A decent online classified ad makes your business grow in no time.
Published by Harry on February 24th 2012 | Business
Being able to online advertise your website, business or sale purchase of anything, and if you have ...
 
Is it a good time to file for bankruptcy when I am seperated or divorcing my spouse?
Published by Maxwelllawfirm on December 15th 2011 | Business
I always ask clients what their marital status is and whether they have joint debts with their spous...
 
Real-time Location Services (RTLS)
Published by Bharatbook on March 27th 2012 | Business
Bharatbook added a new report on " Real-time Location Services (RTLS)" which gives an overview, Dem...
 
Ways to reduce the time spent taking Driving Lessons Chelmsford
Published by Mary Porter on June 16th 2012 | Business
When you think about it it’s a bit of daunting prospect taking Driving Lessons Chelmsford. For st...
 
Rock Salt is very important, especially in winter time
Published by James Blee on June 16th 2012 | Business
Rock salt is also known as halite and is also known as the mineral form of sodium chloride. Unlike r...
 
Every time the likes of a Showtime or Starz manages to get a huge hit on its hands
Published by Xiaojuan on November 29th 2011 | Business
Darmody compounded his mistake, sending Mickey Doyle to Philadelphia to try to pay off his debt to H...
 
Timelapse photography – a way to capture a moment in time
Published by Julia Roger on December 15th 2011 | Business
Timelapse photography can be used to capture an array of different events and occasions, before we t...
 
Save your time and money through Xfinty Deals
Published by Roy Fernandez on March 23rd 2012 | Business
Like most cable services, Xfinity offers high speed internet, digital television and phone systems. ...
 
Why Outsourcing Bookkeeping Work is Better Than Hiring a Full-time In-house Bookkeepers
Published by Amitaabh Saboo on May 11th 2012 | Business
Bookkeeping is a fundamental part of any business. It involves the tasks performed by a bookkeeper s...
 
Preserve Money and time when Purchasing at Women’s Fashion on the net Shops
Published by John Schubert on August 17th 2012 | Business
Convenience is yet another reason why purchasing on-line became a trend at this time. One does not h...