Pricing vs Quality

Strategy

Premium Strategy(product:high/price:high)

Premium pricing, also known as "image pricing" or "prestige pricing," means pricing a product above normal market value so that customers think a product or service is more valuable than similar offerings. Although the price may dissuade some buyers, premium pricing proponents believe that the higher cost will create a market perception that will ultimately bring in more revenue.

Example : Prada can continue to charge a premium price because their entire brand image is based around class.

Rolex watches

Aston martin

Gucci shoes/ apparels

High Value Pricing Strategy(product:high/price:medium)

Attractive pricing that is ideal for market penetration. Here the price of a product is initially set low to rapidly reach a wide fraction of the market and initiate word of mouth.

Example :Many home phone, cellphone, cable and satellite providers offer a discounted rate for a period of time, such as your first six months of service, to get you to switch to their service. After your discount period has ended, the price increases significantly, but the company hopes you have become used to its service and won't go through the trouble to change to a different company.

Airtel TV

Superb Value Strategy (product:high/price:low)

Waitrose's objective was more than survival but to recapture customers, or stop them switching. Their Essential range was launched as the UK hit the recession to re-capture shoppers buying from discount stores, so they reduced the prices of their basic food.

Overcharging pricing strategy(product:medium/price:high)

With overcharging, the company overprices its product in relation to its quality.  In the long run, customers will likely feel "taken," complain to others about it, and will stop buying the product.   Thus, this strategy should be avoided.

True bargain: may be a temporary special to raise revenue or to move discontinued items. "Inventory sale" strategy.

Example- Earlier Iphone charger and the earphones used to be different and so it was overcharged because there was no other way to charge the Iphone or use any other earphones.

IRCTC

Book my show

Medium Value strategy(product:medium/price:medium)

Price and value are in balance, exclusive of other factors. "Square deal" pricing strategy.

Example- Telecom operators- they are providing services in accordance with the needs of the customers and customers feel it as a perfect deal.

Reliance mobiles

Airtel telecom

Honda bilkes

Good Value Strategy(product:medium/price:low)

A pricing strategy which attempts to offer customers a desirable combination of features and benefits at a healthy price point."good value pricing" refers to any pricing strategy that tries to split value creation somewhat evenly between a firm and its customers. This is in contrast to raising prices as high as consumers will pay or pushing them as low as the company can afford. (more profit/less loss)

For example:subwaywalmart

Subway

walmart

Micromax

Rip- OffStrategy(product:low/price:high)

Rip-off pricing refers to a strategy in which a customer is overcharged for something, or receives goods or services not of the quality expected for the price.

A ripoff is usually distinguished from a scam in that a scam involves wrongdoing such as fraud; a ripoff may be considered excessive, but not illegal.

Illustrations:

Poor quality cosmetic products sold at high prices.

Beats by Dre head phones ($14/>$100)

Popcorns

Beats by Dre head phones

False EconomyStrategy

False economy pricing refers to a strategy in which a customer is charged more compared to the quality that is provided. The price of the product will be medium but the quality that is provided will be low compared to price charged

A false economy is an action that saves money at the beginning but which, over a longer period of time, results in more money being spent or wasted than being saved for the customer.

Illustrations:Lava Mobiles Celkon Mobiles

Lava mobiles

Celkon mobiles

Economy Strategy(product:low/price:low)

This is a similar low price strategy involving setting a low initial price to capture market share initially, then when the market grows and costs decrease, costs are reduced further, maximum sales growth objective

Examples

Mc swirls

AIM match box

Mc Donald aaloo tikki burger