Title: Marketing Management: Week 20

Learn
I learned that pricing strategy, like all other parts of the business should reflect the positioning of the product. Our positioning determines how we are perceived and how we are perceived determines our perceived value. The market price should be the same as our perceived value.

Unlearn
I always wonder why we can’t reduce the price of our drugs to match the competition. Now I realized that we could not simply reduce our price to match the competition as it will jeopardize the positioning of our product.

Relearn
Interestingly there is many way to use price as a strategy. For example

Skim Pricing: Setting price at very high levels to hit the cream or top buyers.
Slide-down Pricing: Moving prices down to tap successive layers of demand
Penetration Pricing: Setting price low to gain entry into an existing market
Bundling: Packaging products together, then pricing the bundle lower than the combined price of the two separate products individually.
Price-to-Market: To tap into the economical or psychological value that customers place on the product when it is purchased at different times of the day or different place.
Psychological Pricing: Makes the pricing sound and look lower than it really is.
Follow Pricing: Used by followers and is pricing just below the level of the recognized industry leader.
Segment Pricing: Pricing the same product differently, in different markets or segments, because the customers in different markets or segments place a different value on the product.
Cost-plus Pricing: Building price from cost up, usually on percentage basis.
Preemptive Pricing: Setting price very low to discourage competitive market entry.
Phase-out Pricing: Setting price high to remove or phase out the product.
Loss-Leader Pricing: Setting price low to attract customers, or to generate traffic especially in the consumer market hoping to generate sales of other higher-margin products at the same time.
Terms & Condition of Sale: Generally large financially strong companies use T&C against smaller weaker competitors.
Push vs Pull Pricing: Trade off between motivating the sales force with an extra commission and stimulating the customer with a rebate or a lower-than-normal price.
The Closeout-Pricing: Reducing the price to clear out inventory.