Developing

Pricing Strategie

s

4of 5

When should a company initiate a

price change?

Initiating Price Cuts

To generate additional businessTo gain market share

A price cutting strategy may lead to possible traps

Low Quality

Trap

Consumers may assume quality is low

Fragile market share Trap

Low price buys market

share not market loyalty

Shallow Pocket Trap

Competitors with longer

staying capacity match the lower price

Price war Trap

Competitors may reduce price even

further

Initiating Price Increase

Price increase may be due to

inflation or over

demand Price Increase

in different ways has different impact

on buyers

Delayed Quotation

PricingThe

company doesn’t set a

final price until the

product is delivered

Escalator Clauses

Full price plus all or

part of inflation increase before

delivery

Unbundling

Charging extra for elements that were part of the former offer

Reduction of Discounts

Created by Ronak Jain, NIT Surat, during an internship by Prof. Sameer Mathur,

IIM Lucknow.

www.IIMInternship.com