The second component is market-penetrating pricing, which is setting your price at a level required to penetrate the markets. This involves pricing your product below the competition to penetrate the markets and get buyers acquainted with your product. A third component is establishing a price necessary to obtain a predetermined market share and would be used after the market has been penetrated. Demand-based pricing is assessing a value of your product based on an effort to identify and analyze important characteristics of existing or potential customers. Image pricing is based on the idea that a higher price supports the image of quality or prestige and a lower price suggests a bargain or that the product is of lower quality.
Promotional pricing is used to attract customers' attention.
Imagination is the key to this pricing strategy. Examples are loss leaders, merchandise close outs, and holiday specials. Segmentation pricing is dividing the market into logical groups and pricing to appeal to each group of customers. Examples of this type of pricing might be time of year, income levels of consumers, tourists, and ethnic groups. Volume pricing provides discounts, based on the volume of sales, to increase sales revenues.