Pricing Strategies

1424 Words6 Pages
Pricing Strategies
Ryan W.
MKT 441
February 23, 2006 5 Pricing Strategies
In this paper, I will cover five different pricing strategies used, by retailers and manufacturers, to sell their products. I will demonstrate how pricing products according to one of the five pricing strategies chosen works effectively for each company.
Loss Leader
Look in any newspaper circular, it is chocked full of advertisements from untold numbers of retailers who are trying to push "loss leaders" onto consumers. The loss leader is an item that is sold below cost and is designed to lure people to the store to shop. The loss leader might be a popular item, yet an obscure brand that is sold at a low price. I do not believe that the retailer cares if
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The entry-level $99.00 mattress is good in the sense that it is better than sleeping directly on the floor. The next level mattress might set you back a few more hundred dollars and might seem like the way to go, until they lead you to the top end model.
Finally, the salesman will show you the Tempurpedic Swedish sleep system. This mattress is the top of the line and you may not want to move once they get you to lay on it; in the end, you certainly will not purchase their $99.00 mattress.
Competitive Advantage
The industry that comes to mind when it comes to competitive advantage pricing is gas stations. Notice that most gas stations do not want to price their fuel much lower than their closest competitors do. As soon as one station raises its price, it is almost certain that the neighboring stations will follow suit within a matter of hours. What is really disturbing is that the gas stations will change their prices on the fuel that is already in the ground.
A local gas station down the street from my house prices their fuel slightly more expensive than the Union 76 station down the road. I drive by both stations everyday and notice that as soon as the 76 station changes their price, up or down – but usually up, the local station nearer my house will discover this and change his price to compensate. This pricing strategy indicates that the local fuel station, as with most other fuel stations use competitive advantage to price their product.

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