Pricing Strategies of Organisations Essay Example | Topics and Well Written Essays - 2500 words

Pricing Strategies of Organisations - Essay Example With this shift in pricing strategy, Whirlpool was able to redefine the washing machine industry and identify new markets and segments within it (Gregson, pp. 85-87, 2009; Ferrell & Hartline, pp. 47-49, 2008). Market Skimming Consider the example of Sony’s first High Definition Television (HDTV) in the Japanese market introduced in the year 1990. Sony initially priced it with 43000 US dollars but by the end of the year 1993, the same HDTV with similar features was being sold for almost 6000 US dollars. By the year 2004, a 42-inch HDTV had a price tag of only 1200 US dollars in the Japanese market. What Sony was trying to do here in Japanese market is known as â€Å"price skimming† or â€Å"Market skimming price† in the language of marketing. When companies introduce new, technologically advanced and better products, they deliberately charge very high prices for those products (Gregson, pp. 85-87, 2009). Usually, extensive promotion and hype is created in the mark et about the product, which create a very high demand. Furthermore, the unit costs of producing small volumes are not so high. This allows the organisation, not only to keep the competitors out of the market but at the same time, the high price communicates the message of luxury, uniqueness, and superiority of the product. By starting with the highest possible price and gradually decreasing it over a period, the company is able to â€Å"skim† all the revenue layers of the market (Zhang, pp. 36-39, 2005; Kurtz, MacKenzie & Snow, pp. 325-326, 2009). Important here to note is that with this method, the company is able to target all the segments and markets. With high initial prices, the company targets the market of less price sensitive customers who are willing to pay... This essay approves that many airlines in the airline industry use dynamic pricing strategy, which is another form of price discrimination. Under the umbrella of dynamic pricing, airlines charge different fares to the different customers during peak and off peak seasons, for advanced bookings, for last minute bookings and thus fares vary for different times of the day, different days of the month and different seasons. In fact, there are all chances that two people who are travelling through the same flight may have paid different fares for the same flight with the same benefits. Important here to note is that this kind of pricing not only allows the company to earn some extra revenues during the peak hours, days and seasons but it also ends up in increasing tourism in those areas. However, important here to note is that these are the low cost carriers who use aggressive forms of dynamic pricing. This paper makes a conclusion that pricing strategies play a crucial and imperative role in targeting different markets. Companies and managers, which are aware of the potential of pricing strategies to target different markets, are able to generate more business and revenue for the company. However, as mentioned earlier in the paper as well that much consideration and thought must be put into the pricing strategies to target different markets because an incorrect pricing strategies may not even end up tarnishing the image of the company but it may also end up putting the company into losses