Price Tactic - Definition & Meaning
What is Price Tactic?
Price is a big factor that influences consumer purchase. Therefore companies employ various pricing tactics, also known as pricing strategies, which help them increase sales, profits and attain a higher market share.
The major price tactics are as follows -
Discounting
Discounting is a very commonly used tool. Offering discount on old stock is observed frequently under the name of Stock Clearance Sale. At times discount schemes offer discount only on bulk purchases. Festival discounts are also offered to boost up sale on festive occasions. For example –
Buy 2 get 1 free, 20 % off etc
Odd value pricing
Odd value pricing appeal a lot to customers. It makes price look less from psychological point of view in-spite of the fact that prices are not that low. For Example –
Only for 99; Just for 999 etc
Loss leader
In this case one commodity is sold at exceptionally low price which is actually loss making activity. Since it attracts a lot of customers they make purchases on other items which provide the profit. Eg - Big Baazar
Skimming
When a company comes up with any unique product, they price it at a high range. Their aim is to sell it to a select few rather than the mass market. It is a must that the product be unique else there will be no takers for it. Later they reduce it for the mass market to gain market share. For Example – The pricing of new latest smart phones with some new feature like fingerprint reader or Android OS.
Penetration
It is exactly opposite to skimming pricing. In this case, sellers keep a very low price to gain high market share and increase the sales volume. Once they acquire customer loyal they can raise prices to reap profits.
Hence, this concludes the definition of Price Tactic along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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