Pricing as Positioning Strategy
The Pontiac G8
In 2008 Pontiac Introduced the G8 to the United States. The pricing strategy that Pontiac had in mind for the G8 when it arrived on are shores was that it would out perform its European rivals; the BMW 5 series and the Mercedes E class while costing half as much. I can remember advertisements in car magazines stating that the G8 was the only V8 powered sports sedan for under $30,000 dollars. Unfortunately here in the US the G8 did not sell very well and was discontinued just one year later, and soon after Pontiac its self was phased out as well.
New Product Pricing
The Nintendo Wii
In the summer of 2006 the Nintendo Wii was released world wide. It was an immediate success. According to the NPD group the Wii out sold both the X box 360 and Playstation 3 combined the first half of 2007. There are two major differences between the Wii and its competitors. The first major difference is the technology. The Wii is less advanced then its rivals but more innovative because of the unique motion sensitive controls. The second major difference is the price. When the Wii was released it cost $250 dollars. When the Playstation 3 was released in was over $600 dollars.
The Wii was designed with more casual gamers in mind and is a bargain when compared to its rival game counsels. From a marketing perspective the Wii does a unique thing in terms of pricing strategy. It is both priced to skim and also to penetrate. The Wii was priced to for profit for the first year on two of production and Nintendo heavily prompted it. But at its most expensive it was still much cheaper then any of its rivals and captured a great deal of the market.
Odd Pricing
Every time I walk into the Memorial Union grocery / convince store I see odd pricing. That can be said of most everything found in a convince store. Now that I think about it even gasoline's advertised price is usually an odd number. Odd pricing is the pricing strategy used to convince the consumer they are getting a bargain. Odd pricing is incredibly popular among retailers who do not sell specialty products and services.
Loss Leaders
Razor blade companies are a prime example of the loss leader marketing strategy. I just picked up the Hydro 5! The blade itself is as big as a frying pan. But I know that next year my Hydro 5 will be dwarfed my the Hydro 6 and 7. The strategy of selling the razor at a loss, but selling the razor blades at profit has worked successfully for companies such as Shick and Gillette for since the invention of the disposable razor.
Multiple Unit Pricing
New Product Pricing
The Nintendo Wii
In the summer of 2006 the Nintendo Wii was released world wide. It was an immediate success. According to the NPD group the Wii out sold both the X box 360 and Playstation 3 combined the first half of 2007. There are two major differences between the Wii and its competitors. The first major difference is the technology. The Wii is less advanced then its rivals but more innovative because of the unique motion sensitive controls. The second major difference is the price. When the Wii was released it cost $250 dollars. When the Playstation 3 was released in was over $600 dollars.The Wii was designed with more casual gamers in mind and is a bargain when compared to its rival game counsels. From a marketing perspective the Wii does a unique thing in terms of pricing strategy. It is both priced to skim and also to penetrate. The Wii was priced to for profit for the first year on two of production and Nintendo heavily prompted it. But at its most expensive it was still much cheaper then any of its rivals and captured a great deal of the market.
Odd Pricing
Every time I walk into the Memorial Union grocery / convince store I see odd pricing. That can be said of most everything found in a convince store. Now that I think about it even gasoline's advertised price is usually an odd number. Odd pricing is the pricing strategy used to convince the consumer they are getting a bargain. Odd pricing is incredibly popular among retailers who do not sell specialty products and services.
Loss Leaders
Razor blade companies are a prime example of the loss leader marketing strategy. I just picked up the Hydro 5! The blade itself is as big as a frying pan. But I know that next year my Hydro 5 will be dwarfed my the Hydro 6 and 7. The strategy of selling the razor at a loss, but selling the razor blades at profit has worked successfully for companies such as Shick and Gillette for since the invention of the disposable razor. Multiple Unit Pricing
Multiple unit pricing has been a common pricing strategy for low price merchandisers for years. This strategy is becoming more prominent in electronics these last few years. I first noticed it when Microsoft started to offer it's X box 360 in bundle packages. If you bought a certain bundle package your X box 360 would come equipped with a larger hard drive or a few video games. Lately I have noticed cable companies beginning to offer cable, Internet, and phone services in bundles as well.
