What is Price Strategies? Definition of Price Strategies, Price Strategies Meaning and Concept
Price strategies are lines to be followed by companies when setting the price of their goods or services.
For practical purposes, it could be said that pricing strategies are included in the allocation of related marketing resources that a company carries out when it comes to varying the prices of its goods or services. Through these types of practices that are part of their marketing plan, firms try to give the market and customers an image that can be maintained and remembered over time.
The most common pricing strategies are based on setting prices at different levels: lower, higher or equal to market prices depending on the initial intention and the image you want to convey.
According to this criterion, the strategies that can be chosen in terms of price are:
- Penetration: With prices below the market value in order to create attraction and stimulate the customer to choose the product. It is very common in newly launched products.
- Alignment: It is the simplest way because the good or service that enters the market does so with a price similar to that of its competitors and within the value that customers give it.
- Selection: In this strategy, a product is offered with a price higher than the market price, and of which consumers have a much higher value. Luxury or exclusive items are often promoted through this type of marketing practice.
Within this basic strategy scheme, companies have the possibility of developing multiple variants when setting their prices. Do not forget that the main purpose of this type of marketing mechanism is the achievement of objectives or, in other words, increase your profit as much as possible.
How to choose the pricing strategy?
The choice of a particular type of pricing strategy does not necessarily require its permanence over time, since it is possible to alternate the different possibilities depending on the frequent fluctuations of the market in which the firm works.
The importance of basing a marketing strategy on price is that this variable of the marketing mix acts mainly in the short term thanks to its flexibility. Price is a parameter that allows the company to act quickly in its decision-making, as well as being an indicator of quality that is highly taken into account by the public.
The pricing strategies must also work together, in the sense that the pricing of the different products offered by a company must be designed with a certain level of coherence, since in many cases these are complementary products and their consumption is usually be simultaneous. An example is a company that offers shaving products and sets the price of the blades well above that of its shaving foam.