Page 7 - PCM - Pricing strategies Revista

COMPETITIVE PRICING

STRATEGIES

PREDATORY PRICING REAL LIFE EXAMPLE
T American Airlines reducing its ticket prices to
his strategy has the main the goal to

make the market a monopoly.
below cost and increasing the frequency of its
Firm sells the goods/services at a low flights

price (even below their cost), creating barriers to
enter in the market and forcing the existing firms

to go out of the business. After these, the firm

raises again the price.

THIS STRATEGY IS ILLEGAL.

PENETRATION PRICING REAL LIFE EXAMPLE

W We can easily see the example of penetration
hen the company tries to enter an

pricing strategy in the smartphone market.
existing market with its new
product,
penetration
pricing
As Apple and Samsung had large market shares in
strategy can be a good option to choose.
the market, the other companies such as Huawei
At the beginning of its sale, it provides its new and Xiaomi decided to sell the product with

product with lower price than other competitors’ relatively lower price in order to penetrate the

do. The goal of this strategy is increasing initial market and attract the customers who are
market share rapidly. If the company succeeds in sensitive to price.

taking enough market shares by providing low
price, it gradually raises the price.

This strategy can be used effectively in following
situations; the customers are sensitive to price, it

is difficult to differentiate from other products,
the company can still make a profit with low price

due to economies of scale.

6
PRODUCT AND CLIENTS MANAGEMENT