Define SKIMMING PRICING, PENETRATION PRICING, Competitive pricing, PREDATORY PRICING, ECONOMY PRICING, Psychological Pricing, PRODUCT LINE PRICING, Optional Product Pricing, CAPTIVE PRODUCT PRICING, Product Bundle Pricing, PROMOTIONAL PRICING, Geographical Pricing, Value Pricing.

SKIMMING PRICING:
This is done with the basic idea of gaining a premium from those buyers who always ready to pay a much higher price than others. It refers to the high initial price charged when a new product is introduced in the market. For example, mobile phones which when introduced were highly-priced. Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented.

PENETRATION PRICING:
The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV.

Competitive pricing:
The producer of a new product may decide to fix the price at a competitive level. This is used when the market is highly competitive and the product is not differentiated significantly from the competitive products.

PREDATORY PRICING:
When a firm sets a very low price for one or more of its products with the intention of driving its competitors out of business.

ECONOMY PRICING:
This is a no-frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.


Psychological Pricing
This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example 'price point perspective' Rs. 99 not Rs.100.

PRODUCT LINE PRICING
Where there is a range of product or services the pricing reflect the benefits of parts of the range. For example car washes. Basic wash could be Rs. 200, wash and wax Rs. 400, and the whole package Rs. 600.

Optional Product Pricing.
Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras' increase the overall price of the product or service. For example, airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.

CAPTIVE PRODUCT PRICING
Where products have complements, companies will charge a premium price where the consumer is captured. For example, a razor manufacturer will charge a low price and recoup its margin (and more)
from the sale of the only design of blades which fit the razor.

Product Bundle Pricing.
Here sellers combine several products in the same package. This also serves to move old stock. Videos and CDs are often sold using the bundle approach.

PROMOTIONAL PRICING.
Pricing to promote a product is a very common application. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free).

Geographical Pricing.
Geographical pricing is evident where there are variations in price in different parts of the world. For example rarity value, or where shipping costs increase the price.

Value Pricing.
This approach is used where external factors such as recession or increased competition force companies to provide 'value' products and services to retain sales e.g. value meals at McDonald's.