Three price positioning strategies that businesses often utilize are premium pricing, penetration pricing, and value-based pricing.
Premium Pricing: This strategy involves setting prices higher than the competition. It's used when a product has a unique feature or perceived value that customers are willing to pay extra for, such as superior quality, exclusivity, or brand reputation. For example, luxury brands like Louis Vuitton and Rolex often use premium pricing.
Penetration Pricing: This strategy involves setting a low initial price to attract customers and gain market share quickly. The idea is to draw customers away from competitors and towards your product based on the lower price. Once a substantial customer base or market share is established, the price can gradually increase. Companies often use this strategy when launching a new product or entering a new market.
Value-Based Pricing: This strategy sets prices primarily, but not exclusively, on the value, tangible or intangible, that a product or service will bring to the customer. This is unlike cost-based pricing, where prices are set based on the cost of production. Value-based pricing ensures that customers feel they are getting their money's worth.