Advantages And Disadvantages Of Price Cricing In Marketing
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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.
Lets discuss few advantages of pricing .The following are advantages of using the premium pricing method:
Entry barrier. If a company is strong enough to establish itself as a brand then it becomes very difficult for the competitors to come and interfere in the market.
High profit margin. 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.