Price Skimming:
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.
Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise. However there are other important approaches to pricing.
Psychological Pricing:
This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis.
Product Line Pricing:
Where there is a range of product or services the pricing reflect the benefits of parts of the range.
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.
Captive Product Pricing:
Where products have complements, companies will charge a premium price where the consumer is captured.
Product Bundle Pricing:
Here sellers combine several products in the same package. This also serves to move old stock
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.
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.
Marketing Plan
Place - I intend to sell most of my products at small shops because my primary research showed results that people mostly buy their chocolate bars from small shops. I will also take into consideration that other customers prefer to buy chocolate from supermarkets and vending machines.
Promotion - To promote my product, I will create advertisements which will be shown on day-time TV and radio. This is because research which I discovered shows that most people hear about new chocolate bars on TV and Radio, I will also consider creating billboard advertisements and advertising on bus shelters. This is because I have also found out that people find that bus shelters and billboards (traffic lights) are common places for people to wait, so they will be able to see the advertisement.
Price – The pricing strategy that I am going to use for my product is premium pricing. I have chosen this strategy because if I show a high price it gives off a uniqueness of the product. This approach may also frighten other companies. I have decided to price my product at £0.55. This is because after all my research I have found that most people would expect to pay £0.50 for a standard sized bar of chocolate. So I have cleverly priced my chocolate bar just above the expected price, this also gives out the idea that my chocolate is better quality than other brands, by doing this I can expect more profit.
Product – My final product is going to be a caramel and nut chocolate bar which is going to be packed in foil. This is because looking at my survey about chocolate I have found out that most people like caramel in their chocolate whilst others like nuts, so I have mixed the two together and have decided to have a nut and caramel chocolate bar. From my research I also found out that foil and keeps chocolate fresh and looks good as well, also from my survey I have found out most people would prefer to have their chocolate bar packaged in foil. So this is why I have produced a caramel and nut chocolate bar which is packaged in foil.