The positioning of prices is a marketing tactic employed by businesses to determine the placement of their products or services in the market according to their pricing. The process involves evaluating various factors such as competition, target market, product differentiation, and perceived value to determine the price of a product or service.
Price positioning is a critical aspect of any business strategy as it enables the creation of a unique selling proposition (USP) that sets a business apart from its rivals. It assists businesses in establishing the correct price for their products or services that resonates with their target audience and satisfies their demands.
There are numerous price positioning techniques that businesses can employ to position their products or services in the market. Premium pricing is one such strategy, which involves setting a higher price for a product or service to create an impression of high quality, exclusivity, and luxury. This strategy is typically employed by luxury brands or high-end products.
Economy pricing is another strategy that involves setting a lower price for a product or service to appeal to price-sensitive customers. This technique is commonly employed by discount stores or budget airlines.
Penetration pricing is a strategy employed by businesses to set a lower price for a new product or service to gain market share and attract new customers. Once the business has established a substantial customer base, it can gradually increase the price.
Price skimming is a strategy used by businesses to set a higher price for a new product or service to maximize profits before competitors enter the market. Once the competition increases, the business can lower the price to maintain its market share.
In summary, price positioning is an indispensable component of any business strategy. It aids in the creation of a unique selling proposition and enables businesses to distinguish themselves from their competitors. By employing the appropriate price positioning approach, businesses can attract the right target audience and fulfill their needs.