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A retail pricing strategy where retail price is set at double the wholesale price. For example, if a cost of a product for a retailer is £100, then the sale price would be £200. In a competitive industry, it is often not recommended to use keystone pricing as a pricing strategy due to its relatively high profit margin and the fact that other ...
Predatory pricing is a commercial pricing strategy which involves the use of large scale undercutting to eliminate competition. This is where an industry dominant firm with sizable market power will deliberately reduce the prices of a product or service to loss-making levels to attract all consumers and create a monopoly . [ 1 ]
Decoy effect. In marketing, the decoy effect (or attraction effect or asymmetric dominance effect) is the phenomenon whereby consumers will tend to have a specific change in preference between two options when also presented with a third option that is asymmetrically dominated. [1] An option is asymmetrically dominated when it is inferior in ...
Penetration pricing is a pricing strategy where the price of a product is initially set low to rapidly reach a wide fraction of the market and initiate word of mouth. [1] The strategy works on the expectation that customers will switch to the new brand because of the lower price. Penetration pricing is most commonly associated with marketing ...
Example of psychological pricing at a gas station. Psychological pricing (also price ending or charm pricing) is a pricing and marketing strategy based on the theory that certain prices have a psychological impact. In this pricing method, retail prices are often expressed as just-below numbers: numbers that are just a little less than a round ...
Strategy. Porter's generic strategies describe how a company pursues competitive advantage across its chosen market scope. There are three/four generic strategies, either lower cost, differentiated, or focus. A company chooses to pursue one of two types of competitive advantage, either via lower costs than its competition or by differentiating ...
A loss leader (also leader) [ 1 ] is a pricing strategy where a product is sold at a price below its market cost [ 2 ] to stimulate other sales of more profitable goods or services. With this sales promotion / marketing strategy, a "leader" is any popular article, i.e., sold at a low price to attract customers. [ 3 ]
Pay what you want (or PWYW, also referred to as value-for-value model[1][2]) is a pricing strategy where buyers pay their desired amount for a given commodity. This amount can sometimes include zero. A minimum (floor) price may be set, and/or a suggested price may be indicated as guidance for the buyer. The buyer can select an amount higher or ...