perceived by other companies. Therefore, a value map is not a static tool used once; changes in competitor offerings and customer perceptions must be monitored continuously.

Classification pricing strategies

Price positioning is just one of the pricing decisions a company needs to make. It is not enough to carry out adequate price positioning; it must be linked to the pricing strategy.

There are four pricing strategies, each of which corresponds to a certain price/quality ratio:

· premium strategy;

· economical strategy;

· penetration strategy;

· skimming strategy.

The basis of all pricing strategies is the assessment of value or trade-off between

A loose concept that is often overused, companies must consider which aspects of quality are most important to consumers.

Rice. 15. Types of pricing strategies based on the ratio of “price level/offered benefits”

Expected value has two extremes:

· high price for highly perceived quality (this corresponds to a premium pricing strategy);

· low price for relatively low perceived quality (economical pricing).

Note that there is also an “average type” of pricing strategy that offers an average market price level and “average” perceived quality. This strategy can be called a strategy of following the average market level.

The situation of excess value proposition (quality perceived by consumers above the price level) corresponds to the penetration strategy (position below the VEL line). The opposite situation - the price level exceeding the supply quality level - means that the retailer has chosen a “cream skimming” strategy (above the VEL line).

Let's take a quick look at all four strategies.

Skimming strategy and market penetration strategy

The skimming strategy is often used when introducing new products to the market. In this case, an artificially high price is set for the product (a price that exceeds the “fair” price for this level of quality), which is often gradually reduced over time, allowing a wider range of consumers to use the product (service). Let us recall, for example, the first steps of such a product as cellular telephone, when this product could easily be classified as a luxury item.

To effectively implement this strategy, the following conditions are necessary:

potential consumer;

· there is a group of buyers who are willing to pay a high price for the product;

· costs must be recouped in a short period;

· potential competitors are relatively weak or lagging behind;

· price sensitivity is low.

The biggest disadvantage of this strategy is that high profits attract competitors, and they are ready to introduce similar products to a new market. Therefore, skimming can be successful if the market has many barriers to entry, such as patent protection, complex technology, high requirements to capital.

With this strategy, the company’s position on the value map is above the VEL line.

Market penetration strategy usually used to quickly enter the market and quickly gain a large market share. In this case, to ensure

recognition of a new market offer by a wide range of buyers, prices for goods are set below competitive ones or perceived as “fair” if there are no similar goods on the market yet.

This strategy is often used by companies specializing in the sale of fast-moving consumer goods (FMCGs). They often use this pricing method to achieve rapid market penetration during the first two years, then gradually increase the price once the product has established a strong market position and a loyal following of consumers.

This strategy is effective when demand for a product is highly elastic. By setting a relatively low price, the firm hopes to stimulate market growth and capture a larger market share. This behavior also serves to discourage competition because other firms may be less able to charge such low prices due to higher costs. A penetration strategy can trigger economies of scale.

U penetration strategies have two main disadvantages.

· First, the firm must sell a large volume of products before it can recoup its start-up costs. Thus, short-term profits are sacrificed for greater market share and long-term profits.

· Secondly, although the overall profit may ultimately be

higher than what the firm gets from a skimming strategy, the return on investment is usually lower.

The following conditions are favorable for implementing a market penetration strategy:

· the market is very price sensitive;

· there are economies of scale;

· the main goal of the company is market share, not high short-term profit;

· the quality of the product is beyond doubt.

Economical and premium strategies; leader strategy; unified strategy

prices and differentiated pricing

The remaining pricing strategies can be described briefly. Companies trading at premium prices provide very high quality products and customer service. Buyers who value high quality are not deterred by higher prices.

Economical pricing aimed at the most price-sensitive buyers. To maintain a low-price strategy while still making a profit, companies offer customers less value for less money.

In many industries, pricing strategy is dictated by the price leader. His

the choice will directly affect the lives of competitors. The leader may choose a pressure pricing strategy by resisting price increases. The leader sets an upper limit on the possible price, thereby maintaining price and cost compression and creating problems for new potential competitors to enter the market.

On the other hand, the leader can choose an opportunistic pricing strategy and, under favorable conditions, increase prices to the point where they are still perceived by the consumer as acceptable. At the same time, in this case there are obvious risks of new competitors entering the market, more aggressive behavior existing competitors and possible hostility from consumers with an increasing likelihood of losing some of them.

Single Price Strategy implies that the same price should exist for all customers without exception.

An alternative is differentiated pricing strategy , at which prices for different groups buyers can be determined on an individual basis, taking into account specific circumstances related to competitive and consumer aspects, as well as the desire and willingness of customers to pay. The differentiated pricing strategy assumes that price differences imply certain differences in the goods sold (for example, in sets of related services).

If a company offers different consumers the same goods or services at different prices, it is said to be price discrimination strategies.

Pricing strategies of trading companies

Pricing strategies are developed not only by product manufacturers, service and trading companies. The two main strategies of trading enterprises are the “everyday low pricing” (EDLP) and “high/low pricing” (HLP, HiLo) approaches. Let's look at their main features and try to relate them to the four pricing strategies mentioned above.

"Low prices every day"- this is a strategy that sets a stable price at a level between the constant prices of competitors and stimulating (sale) prices

Moreover, “low” does not mean “lowest”. Although EDLP merchants strive for truly low prices, they do not always offer the cheapest products on the market. Therefore, a number of authors believe that a more correct name for this strategy would be “daily stable low prices.”

Prices in this case do not fluctuate depending on the season, but are constantly kept at a relatively low level and are further reduced only when the range of goods is almost sold out. Although many of the retailers using the method

EDLP do not believe in the effectiveness of reduced prices and sales; they direct their efforts to maintaining stable demand for treatment throughout the year by setting the “correct” prices for their goods.

According to analysts, the EDLP strategy has gained especially great popularity in the last ten years. In general, this strategy can be successfully used by large retailers that generate significant economies of scale and have significant bargaining power in the purchasing process.

If we draw an analogy between “everyday low prices” and the pricing strategies discussed above, we can see a connection between the EDLP approach and either economic pricing or penetration pricing.

In the first case, the EDLP will be no different from the discount retailer's approach, where low prices correspond to a relatively low value proposition.

In the second case, you need to start by explaining to customers the value of EDLP as a strategy that offers high value for relatively little money. If customers perceive that the quality of the product offering and other attributes of the sales offer exceeds the price charged, their purchase intention is likely to increase. In addition, if consumers learn that prices will remain at the same level for a long time, comparative analysis prices may be reduced as the buyer is convinced that EDLP provides the best value for little money.

The following main advantages of the “low prices every day” strategy can be identified.

· Forming a sense of fairness in the buyer.It is known that among

There is an increasing tradition among shoppers to wait for sales or to make the rounds of stores in the hope of participating in sales promotions that offer the most favorable prices. The EDLP strategy allows the company to avoid engaging in price wars during periods of sales and focus its efforts on strengthening its position in the market as a trader offering fair prices. With a direct and clear message, a consistently low price strategy is welcomed by most buyers because they feel they are getting a fair deal.

· Reducing the number of deferred purchases. Once buyers realize that prices

are stably at an acceptable level, usually the one-time volume of purchases increases, the frequency of store visits increases, buyers do not postpone purchases in anticipation of sales.

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Skimming strategy is a strategy that consists of maximizing the rate of profit.  

The skimming strategy also works well with prestige products, such as high-end cosmetics.  

The skimming strategy is aimed at a narrow target segment of buyers with high level income and price-inelastic demand, who perceive a high price as evidence of a high quality product. A high price is justified either in the absence of competitors or if it is unattractive to them. It is also advisable to make sure that in other market segments demand is price elastic, since this strategy involves sequential entry into other segments with cheaper product options or a slightly lower price for the first offer.  

The strategy of skimming the cream from the market is the practice of setting the highest possible price for a newly invented product, which makes it profitable for only some segments of the market to perceive the new product, and allows the company to receive the highest possible income.  

The skimming strategy involves high prices to skim the cream off the market. After the initial wave of sales slows down, the firm reduces the price, attracting additional customers that it is satisfied with. new price. True leaders are moving to release new, more advanced products.  

Strategies for skimming and market penetration are discussed in more detail in Chap.  

Skimming and market penetration strategies are discussed in more detail in Chap.  

In the Russian Federation, the skimming strategy may be preferable when it comes to starting to promote a product on the market that has no close analogues and satisfies those needs and demands that were previously not sufficiently understood by consumers. Traditionally, marketing products sold for the purpose of skimming the market meant obtaining answers to the questions: is there a close analogue of the product on the market. Which market segment should the new product be targeted at? What groups of people (initially a relatively small circle of consumers) does this product satisfy?  

From a financial perspective, the skimming strategy involves less risk. As a rule, it is applied to fundamentally new products or markets with a large number of segments. Its main disadvantage is the presence of opportunity costs that arise when competitors quickly exploit market potential by offering customers higher quality goods at low prices.  

A company that uses the skimming strategy very effectively is Bosch, a German supplier of automotive components. Companies that combine low prices with aggressive promotion efforts are pursuing what is known as a fast penetration strategy. For example, Amstrad successfully attacked IBM in the personal computer market using a rapid penetration strategy. Finally, the slow penetration strategy combines low price with low promotional costs. These strategies are used for private label products: to ensure the sale of a product, it is quite possible to do without measures to promote it on the market, and minimal promotion costs help ensure that such products have enough high rate arrived. Analysis of these price/promotion combinations can be of considerable benefit when considering marketing strategies for introducing new products to the market.  

Setting a price for a new product is a more complex problem the more original it is, i.e. the more difficult it is to compare it with other products. The initial price is therefore of fundamental importance and influences the commercial and financial fate of the entire development. After analyzing costs, demand, and competition, the firm must choose between two contrasting strategies: (a) a high initial price strategy to skim off demand, and (b) a rapid entry strategy using a low initial price.

“Skimming” pricing strategy

This strategy involves selling a new product at a high price, voluntarily limiting it to a group of buyers willing to pay that price, and quickly achieving significant cash flows. This strategy has many advantages; however, for its success, a number of conditions must be met (Dean, 1950).

There are reasons to believe that the life cycle of a new product will be short or competitors will be able to quickly imitate it, which will make it difficult to return the investment. This strategy is also justified if demand is inelastic, at least for a large group of buyers.

The product is so new that the buyer has no basis of comparison, market maturation will be slow, demand is inelastic, and it is tempting for the firm to take advantage of this by charging a high price, which then adjusts to the competition's prices.

The release of a new product with a high price will allow the market to be divided into segments with different price elasticities. With an initial price, it is possible to skim off the least price-sensitive consumers. Subsequent price reductions will allow penetration into segments with greater elasticity. This corresponds to temporary price discrimination.

Demand is difficult to estimate, and it is risky to forecast market expansion when prices fall. This problem occurs, for example, when manufacturing process has not yet been worked out and there is a danger that costs will exceed the expected level.

The company does not have the necessary working capital to launch a new product on a large scale, and selling it at high prices will get them.

The skimming strategy can be seen as cautious. more financial than commercial. Its main advantage is that it leaves the way open for subsequent adjustments in prices taking into account market evolution and competition. From a commercial point of view, it is always easier to reduce the price than to increase it. From a financial point of view, it allows you to quickly free up capital that can be used in other projects.

Strategically, pricing policy is always aimed at the future, and the future, in turn, is associated with certain changes. And therefore we can say that the choice of pricing strategy directly depends on the stage life cycle goods

PRODUCT LIFE CYCLE - the period of time from the beginning of the creation of a product until the end of its demand on the market and the cessation of production. A product, like an animate being, is born, develops, becomes obsolete and “dies”, i.e. gives way to another product that has higher consumer properties and other advantages. There are four main phases of life cycle: introduction, growth, maturity and decline. By analyzing these phases, it is possible to obtain data on the characteristics of the market, the prospects for the dynamics of product sales, the forms of competition typical for this phase, the levels of costs and profits, which will allow optimizing pricing policy and develop the company’s pricing strategy for a given product or product group.

Dependence of pricing strategy on the product life cycle:

1. Market introduction stage.

There are two options for setting prices here. If the product has serious competitive advantages, it is unique and there is little competition, it is advisable to use the “cream skimming” strategy, the condition for applying this strategy is the high quality of the product or its exclusivity, which makes it possible to request maximum price and get maximum profit. This strategy focuses on selling a product to a narrow group of consumers who want to purchase it for its unique properties. This strategy provides a quick payback on research and development of a new product, as well as a powerful level of launch advertising. If a product does not have obvious advantages, it is advisable to use a “market penetration” strategy, a necessary condition to implement this strategy is the low cost of the product, which makes it possible to set a low price in order to quick creation customer base. Low prices encourage trial purchases and mass consumption by a large consumer base. Thus, low prices provide the opportunity to quickly test the product and create favorable customer attitudes before competitors invade the market

2. Growth stage.

At this stage, the market is growing due to an increase in the number of users and consumers of this product. As the market expands, competition increases. Competitors' offers usually differ in properties, but price becomes a competitive tool. Here, as at the previous stage, two options for setting prices are also possible: if at the previous stage the “cream skimming” strategy was used, then at this stage it is advisable to reduce prices (since competitors have already copied the main advantages of the product, a low price can be used to increase market share and restrictions on the entry of competitors into it.); if a “market penetration” strategy was used, then it is advisable, on the contrary, to slightly increase prices; at this stage, setting a high price can be used to increase profits by skimming off the cream, since the market has already been covered. Or it is possible to choose a “follow the leader” strategy (i.e., set prices at the price level of the market leader).

3. Maturity stage.

At this stage, substitute products appear and market growth slows down or stops. Price becomes important as the product becomes standardized and offers little innovation. It is best for the company to avoid this stage or at least minimize its consequences by constantly improving the product or quality of service. Pricing alternatives: maintaining high prices to finance the development of new products or using low prices to simply maintain competitiveness and maintain market share. It should be noted that the large volume of sales at this stage compensates for the reduction in prices.

4. Stage of leaving the market.

Accompanied, as a rule, by a sale of inventory. At this stage, one of two strategies can be used: reducing the price to the cost level in order to sell out inventory as quickly as possible; refusal to further reduce prices and attempt to maintain profit levels without worrying about market share.

The skimming strategy is a pricing strategy that is used:

· firstly, to new products appearing on the market for the first time, protected by a patent and having no analogues.

· secondly, to goods aimed at wealthy buyers who are interested in the quality and uniqueness of the product, i.e. to a market segment where demand does not depend on price dynamics.

· thirdly, to new products for which the company does not have the prospect of long-term mass sales, including due to the lack of necessary capacities.

· fourthly, to test the product, its price and gradually bring it closer to an acceptable level.

I believe that an example of a product for which a skimming strategy can be used is:

1. Clothing models from the new collection of the famous designer. This is a product appearing on the market for the first time, aimed at wealthy buyers who are interested in the quality, uniqueness of the product and purchasing it is considered very prestigious.

2. New products on the mobile communications market. This is a product appearing on the market for the first time and has no analogues for some time. A product aimed at wealthy buyers who can’t wait to purchase it regardless of the price.

A "strong market penetration" strategy is a pricing strategy in which a new product is priced relatively low in order to attract a large number of buyers and gain a large market share.

Examples include:

1. New entry into the market medicine. IN in this case When applying the “strong market penetration” strategy, the following goals are pursued: rapid achievement of large sales volumes medicinal product; achieving a high market share and a strong market position; a relatively low price can reduce the risk of failure when bringing a drug to market; preventing potential competitors from entering the market.

2. Manufacturers household appliances to implement the strategy of “strong market penetration”, expanding the company’s product range, leading to stabilization of profits and greater coverage of market segments. Large manufacturers of washing machines always have a model with a minimum set of characteristics and an affordable price.