NAOMIE NGUMBILA LUYEYE
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PRICING STRATEGY
1 - find five examples of pricing strategies :
Discount Pricing: Businesses in North Cyprus may implement discount pricing, offering reduced
prices on certain products or services. This strategy can attract price-sensitive consumers and
stimulate sales, especially during promotional events or specific time periods.
Value-Based Pricing: Some businesses may opt for value-based pricing, where prices are set based
on the perceived value of the product or service to the customer. This approach emphasizes the
quality or unique features of the offering and can be effective in capturing a segment of consumers
willing to pay for added value.
Psychological Pricing: This strategy involves setting prices to create a psychological impact on
consumers. For instance, pricing products at 9.99 instead of 10.00 can create the perception of a
lower cost. This tactic aims to influence consumer perception and enhance sales.
Dynamic Pricing: Businesses may utilize dynamic pricing, adjusting prices in real-time based on
factors such as demand, time of day, or availability. This approach is common in industries like
hospitality and e-commerce, allowing businesses to optimize pricing for maximum revenue.
Freemium Model: In certain sectors, a freemium pricing strategy might be observed. This involves
offering a basic version of a product or service for free, while charging for premium features or
enhanced functionality. This strategy can attract a wide user base and monetize through additional
offerings or upgrades.
2 - explain each pricing method and discuss its efficacy :
Discount Pricing → Discount pricing involves offering products or services at reduced prices, often
through sales, promotions, or loyalty programs. This aims to attract price-conscious consumers and
stimulate purchasing.
Efficacy: It can be effective for boosting short-term sales and clearing inventory. However, constant
reliance on discounts may devalue the brand or product in the long run, and consumers might wait
for discounts before making purchases.
Perspective: While discount pricing can drive immediate sales, businesses should carefully balance
it to maintain perceived value and brand integrity over time.
Value-Based Pricing → Value-based pricing sets prices based on the perceived value of a product or
service to the customer. This strategy focuses on the benefits and unique features offered.
Efficacy: Effective in capturing consumers willing to pay for quality or specific attributes.
However, accurately assessing and communicating the value proposition is crucial for success.
Perspective: This strategy aligns with delivering quality and value to customers. It requires a deep
understanding of customer preferences and effective communication of the product's unique selling
points.
Psychological Pricing → Psychological pricing involves setting prices to influence consumer
perception, often using pricing strategies like $9.99 instead of $10.00 to create the illusion of a
lower cost.
Efficacy: Can be effective in attracting price-sensitive consumers and encouraging impulse
purchases. However, its impact may diminish over time as consumers become more aware of these
tactics.
Perspective: While psychological pricing can create a positive perception, businesses should
continually assess its impact and consider combining it with other strategies to maintain
effectiveness.
Dynamic Pricing → Dynamic pricing adjusts prices in real-time based on various factors such as
demand, seasonality, or competition. This strategy is common in industries where market conditions
fluctuate rapidly.
Efficacy: Highly effective for optimizing revenue in dynamic markets. However, it requires
sophisticated algorithms and careful monitoring to avoid negative customer reactions.
Perspective: Dynamic pricing is a powerful tool when implemented judiciously, considering both
market conditions and customer sentiment. Transparency and fairness are essential to maintain trust.
Freemium Model → The freemium model offers a basic version of a product or service for free,
while charging for premium features or enhanced functionality.
Efficacy: Effective in attracting a broad user base and converting a percentage of users into paying
customers. However, success depends on a compelling free offering and a clear distinction between
free and premium features.
Perspective: The freemium model can be a strategic approach for customer acquisition, but
businesses must carefully design and communicate the value proposition to encourage upsells
without alienating free users.