we will explain the basic product mix pricing strategies that change a product’s pricing when it is part of a product mix. in fact, when you buy the razor, you are a captive customer for the products the brand makes the real money with – the higher-margin replacement cartridges. therefore, the strategy for setting a product’s price often has to be changed when the product is part of a product mix. since the various products in the mix have related demand and costs, but face different degrees of competition, pricing is difficult. thus, in product line pricing, the firm must determine the price steps between various products in a product line based on cost differences between the products, competitors’ prices, and, most importantly, customer perceptions of the value of different features. optional product pricing is the pricing of optional or accessory products along with a main product.
we speak of captive product pricing when companies make product that must be used along with the main product. captive product pricing is an extremely powerful strategy in the set of product mix pricing strategies. the difficulty is in finding the right balance between the main product and captive product prices. but by using by-product pricing, the company tries to find a market for these by-products to help offset the costs of disposing of them and make the price of the main product more competitive. the last one of the product mix pricing strategies is product bundle pricing. you see that setting the prices for a product becomes harder when it is part of a product mix – because all products and their prices must be interrelated.
each product within the structure forms a part of the product mix. if dove has multiple products in its portfolio, and it starts one cheap product, it can affect the brand equity of dove and the profitability of dove product line will drop. in general, there are 6 types of product mix pricing used by any organisation to take care of their product mix and product lines. when you want to plan product mix pricing, you have to ensure that target markets of the complete product line are covered. many a times, an organisation charges extra for an added feature that it provides and the prices are kept on the basis of the feature which is being provided. it is a smart manoeuvre by the likes of hewlett packard and gillette which are dominating their respective markets. however, a minimum margin is kept for the base product and higher margin is kept for ancillary product.
it is an interesting form of product mix pricing. by product pricing can simple be explained with the example of crude oil. so the pricing of the raw material as well as its by product is kept different. a similar pricing is observed in coconut oil production where the remaining coconut is rich in fibre and can be used as fertiliser. this is a kind of product mix pricing which is used to push more product in the market at a lower price point. it is a favourite tactic of start-up brands. let’s stay in touch 🙂 after going through some of the posting , i have come to understand marketing how you have simplified the notes .this will definitely help me to answer some examination questions in the up coming mid semester
the last one of the product mix pricing strategies is product bundle pricing. using product bundle pricing, companies combine several products and offer the bundle at a reduced price. the best example is probably a menu at mcdonald’s: you get a bundle consisting of a burger, fries and a soft drink at a reduced price. pricing is a critical element of the marketing mix and companies must make strategic choices about how to price their line but all the products within an organization. there are various product mix pricing strategies used., price adjustment strategies, price adjustment strategies, product mix pricing strategies pdf, product mix pricing strategies marketing, product mix pricing strategies slideshare.
this strategy is used for setting the price for entire product line. many companies now a day develop product line instead pricing in the marketing mix achieve the company’s financial goals (profitability) fit within the realities of the marketplace ( the pricing strategy matrix shows how different levels of price and quality combine to form four commonly used pricing,
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