Pricing Strategy:
1) New Service Pricing Strategy: While launching a new service there are two alternative pricing strategies.
- Skimming Strategy: In this the services are introduced at a high price. It is assume that the customers are more concerned about obtaining a quality service rather than cost of the service. As the demand for the services falls, the price level is reduced e.g. mobile phones, computers, etc.
- Penetration Pricing:
In this, the new services are priced low. The prices are kept low t stimulate trial and thereby ensure customer loyalty. Low pricing is possible when the services are sensitive to price and it is possible to achieve economies of large scale operations by operating at large volumes. The penetration pricing begins with a low price but it increases in the growth stage. The increase is usually associated with additional services that are offered.
2) Differential Pricing/Market Segmentation Pricing: Different market segments may show different price elasticity of demand. The pricing strategy adopted to successfully cater t these groups is known as discriminatory pricing on the basis of market segmentation. It may be done on the following basis.
- Different time of consumption.
- Different point of consumption.
- Group of buyers.
3) Service-Mix Pricing: In this, the firms with multiple service offering that’ are more often interrelated may adopt this strategy. It may resort to
i) Captive service:
ii) In captive service strategy the customer has no choice but to get attritional service offer from the service provider along with the core service.
iii) Competing services:
iv) In this the service firm competes with its own offering.
v) Optional additional service:
In this the service provider gives an option, to the customer to purchase the optional services along with the core services.
4) Price Bundling: It means pricing and selling the services as a group rather than an individual offering. In this the service firm will be able to sell all the products in the service line. E.g. Health clubs.
5) Relationship Pricing: In this type of pricing the lifetime value of the customer is taken into account. The main objective is to encourage customer loyalty by rewarding it. John Winkler has rightly stated that pricing can never be an automatic or impersonal process-, it cannot be reduced to a mathematical or accounting formula. It is an elusive art. T11 more you examine the market, the better you judge the value of what you want to offer.
6) Competitors Pricing: Services which are very price sensitive and where the core benefits sought are largely similar, competition-oriented pricing occurs frequently. Organizations that operate on competition-oriented pricing strategies will try to influence the consumer preference through elements of marketing mix such as service quality.
7) Marginal Pricing: It is based on the concept of marginal cost and is particularly relevant for service industry. The marginal cost is the cost of last unit of output and may be very low. For an example, in case of passenger airline with a capacity of 100 seats empty seats will not be preferred instead they can be filled with passengers paying reduced ticket prices -because any way the fuel cost, maintenance, staffing cost so on are made for 100 seats. Carry empty seats means carrying loss.
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