Determining the best price is an important part of our Marketing Mix. If our price is too high, we won't have enough sales. If our price is too low, we won't make enough money.
We will take a closer look at some of the pricing strategies that companies use.
First, let's talk about illegal pricing strategies. Price Fixing happens when two related businesses agree to set the same prices. For example, two gas stations across the street from each other agree to set the same price for gas.
Why is price fixing bad?
The Bait and Switch is another illegal pricing strategy. A business will advertise a product for a great price, but when customers come to buy the item it is "out of stock". The business will then try to sell the customer a higher priced item. I'll tell you about an example of someone I used to work with.
Price Discrimination is the last illegal pricing strategy we will look at. We'll look at the definition and first part of the video on this link (we may look at this article about airline discrimination with Apple devices). This article looks at the differences in prices between men and women's products.
One common pricing strategy not included in the information below is penetration pricing. We will look at this link and video that explains how it is used.
Another strategy used by many companies selling new technology or electronics is a skimming price strategy. We will look at this link and video that explains how it is used.
On Classroom, there is a link to a book section on pricing strategies. Read over the section on pricing strategies (pg. 237 - 240). Work with a partner to create a mind map or graphic organizer with the key terms and ideas (not just bold & headings, about 16 including the five steps to determining price) from that section. Add your mind map or graphic organizer (Google Drawing templates) to this collaborative page. Be ready to share what you discovered/created. We will talk about the five steps to determining the price together.
We will review some of the information and additional pricing strategies in this presentation we use in the entrepreneurship course.
Dynamic pricing, where prices change or adjust based on various conditions, is being used more often in a number of industries. This is especially true in the sports and entertainment industries, where many organizations have started to adopt these new pricing strategies. This article from Wharton University looks at how dynamic pricing is being used in a number of industries. Read the article and talk with me about two key takeaways you gained.
The Challenge - Pricing Strategies Show & Tell 12 pts
You will find a product you own that falls into one of the pricing strategies you learned about. Using the 'show and tell' format, you will give some background on the product, explain/define the pricing strategy you choose, and how your product falls into that category. Make sure to include all three items/points. Each person should have an original idea, and the number of people using each pricing strategy will be limited.
I will demonstrate with this example.
We will review for your pricing strategies quiz using this Kahoot. Anything we talked about on this page and info from the reading section are fair game on the quiz.
Kahoot Challenge - Use this Kahoot link to test your pricing knowledge.