Pricing Strategy

Price is only one of the marketing mix tools used by companies to achieve marketing goals. Before set the price, the company must decide products strategy. If the company has selected the target market and make the positioning carefully so marketing mix strategies including the price will be easily implemented.

Determination in the price of a new product can determine the success of these products in the market. There are some of the factors that affect the pricing issues such as internal factors which consists of the marketing objectives, marketing mix strategies, and cost considerations and organizational factors and the external factors which consists of market behaviour and market demand, competition and consumer expectations.

Speaking price means talking about how the image quality and how exclusive the product. High or low prices affect the perception of quality, so it determines the image of a brand or product. In the perception of consumers often apply the logic that the expensive price means good quality and cheap price, which means less quality. At a certain level set the price also means talking about exclusivity.

Pricing Management is not separated from the pricing objectives that are quite varied, ranging as means to achieve profit growth, revenue gain, image shifting, segment market leadership , product quality leadership and make new products.

Pricing strategies will be effective if applied properly in accordance with the characteristics of the products (new product / old, commodities / not, tangible / intangible) and the marketing environment, such as competition situation (tight or not, the market structure and behavior of consumers). In the products that are not tangible (intangible), the price should be able to present the image quality. And the Perceived value approach is the most appropriate approach.

In general, differentiated pricing strategy based on three main runway that is the price based on the cost price, based on demand and based oncompetition. The three strategy base can be described with a variety of approaches in the pricing strategy.

When a company has set a base price of the products or services, then the company can determine the pricing strategy withconsidering of various factors such as price competitor, company goals and product life cycle.
In the introduction of new products, there are two prominent price strategy, namely skimming and penetration.

1. Skimming Price
Skimming strategy is begin with set a high price when the new products launched and time to time will continue to fall in price. This strategy can be applied if the product is indeed have a competitive advantage compared to products that have been present. Products with technology inside is very suitable to use this approach. If we see electronic products and cellular phone almost all using this approach when is launched the price is still expensive, and then gradually decreased. Example : computer.

2. Price penetration
Price penetration strategy is determining the initial price as low as possible with the goal of market penetration to quickly and build brand loyalty from the consumers. Can be applied in the unfragmented market situation in different segments,and the product does not have a high symbolic value. This approach is also effective with the target whom market-sensitive prices.
Example: noodle.