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Advantages And Disadvantages Of Neutral Pricing

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NEUTRAL PRICING :

It is a strategy which is in default in nature. This strategy is used to minimse the role of pricing in a marketing mix. The neutral price does not mean a price in between that of competitors, but in relationship to the firm 's value.
The main quality that can be associated with premium pricing is luxury. It is basically a psychological association . This means that consumers don’t hesitate to pay more for certain goods and not for others. The marketing department makes sure to create that brand image and awareness so that the consumers are willing to pay extra. It is not a easy task. It usually means adding value for which the consumer is willing to pay extra. The main factor differentiating a brand is nothing but luxury. …show more content…

Once a company is successful in creating that brand awareness, it has huge opportunity of making high profits. This is because the companies charge very high price. We can see this in the cases of jewellery market, for the premium segment like diamond and platinum buyers, the prices are set very high but yet they buy believing in the brand. That is what is brand image and is a very important thing a marketer should understand.
Disadvantages
The following are disadvantages of using the pricing method:
 Branding cost. To establish and maintain this type of strategy the costs are massive. Usually the companies has difficulty maintaining its price points.
 Competition. Competitions are always there and when a competitor charges low in comparison to our price this can cause a problem, because it increases the perception that cheap is better. So, this can be a very challenge to create that brand awareness.
 High unit costs. The unit costs is usually high of such companies because the sales volume is quit low. It is only for a premium segment and thus it makes a huge difference. This can be a little disappointing but otherwise profits are huge.

Conclusion: lets conclude the above discussion on Premium pricing also called as prestige pricing or image

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