However, this approach assumes that the quantity demanded is basically fixed and that the major task is to set prices to recover costs. A marketer needs to be aware of the prices charged for competing brands. Even when nonprice competition is used, a marketer needs to be aware of the prices charged by competitors. If a company uses price as a competitive tool, it can price its brand below competing brands. A pricing strategy is an approach or a course of action designed to achieve pricing and marketing objectives.
Pricing strategies help marketers solve the practical problems of establishing prices.
Negotiated pricing , secondary-market pricing , periodic discounting , and random discounting are all ways in which differential pricing can occur. Two strategies used in new-product pricing are price skimming and penetration pricing . Product-line pricing establishes and adjusts the prices of multiple products within a product line. This strategy includes captive pricing , premium pricing , bait pricing , and price lining . Psychological pricing attempts to influence customers' perceptions of price to make a product's price more attractive.