Penetration Pricing Essay Example | Topics and Well Written Essays - 750 words

Penetration Pricing - Essay Example This pricing strategy makes the customers to come in large numbers to buy the products due to its lower price in the market making the firm to make high sales. Penetration pricing when applied properly can be of great help to the firm since it will increase in the market share and the sales volume. Experience curve pricing Experience curve pricing is a type of marketing strategy that is used to estimate future average cost of products or services. This type of pricing is based on the experience of the firm on how it estimates its price of product and services within a given period of time (Tellis 146). When conducting this type of pricing strategy the firm must use statistical techniques similar to those used in past pricing. Image pricing Image pricing is a marketing strategy that is used by firms when they have two products in the market that are exactly and have the same features but the prices are different. A firm makes sure that it will supply the market with product and gives it a new shape, name and consequently the price differs only by changing the image of the product. The idea behind this marketing strategy is to target the potential buyers who go for high price products since the customer thinks that the higher the price the better the quality. Examples of brands that emulate penetration pricing are consumable products like sugar, maize floor, cooking oil among others. Examples of products that adopt experience curve pricing are valuable products made up of gold and silver among other minerals while image pricing is used in pricing car models, clothes and furniture. Analysis of pricing strategies Penetration pricing if conducted properly, will achieve market dominance and this must be conducted for a long time in order to secure a good number of customers. If a firm is able to lower the prices for long time, it will create a barrier in the market making hard for new entrants in the market and lastly it will reduce competition since new entrants mus t wait until the firm increases the prices of products and services. Image pricing achieves dominance only to the upper class customers since they have to look at the quality of the products. The lower class customers will be exploited when the product is only one in the market. Lastly experience curve pricing will have no impact to the customer since the product may have the same price if the firm trend continues. The firm will achieve market dominance if the product will not increase the price of products and service thus enjoying an increase in sales. Impact of pricing strategy to the customers The pricing strategies aims at reducing competition in the market and this is achieved by lowering the prices of products and services which results to increase in the number of customers. The brand is not altered in any manner and the customer will benefit from the low prices thus making a firm to increase sales volume. For the image pricing, competition is reduced and new entrants will h ave to wait until the products are out of the market, but the customer will be exploited. Experience curve pricing aim at reducing high competition that will work; the customers will enjoy the pricing strategy since the product will be charged at low price. The brand will be of high quality and thus the firm will achieve market dominance. Conclusions of pricing strategies Some marketing strategies will exploit the customers while others will