Page 8 - PCM - Pricing strategies Revista
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EXPERIENCE CURVE PRICING REAL LIFE EXAMPLE
E IKEA, the Swedish furniture manufacturing
xperience curve pricing strategy is based
on experience curve, which implies that
company, adopted experience curve pricing
the more experience a producer has in
producing a particular product, the lower cost it strategy with its product, table, named ''Lack''. ยด
The company was able to lower the price of this
reaches.
product because it is one of the most experienced
This strategy works well in a competitive market one in the furniture industry and because of
with price sensitive customers and strong economies of scale.
experience effects.
By lowering the prices of the items, IKEA made
The most experienced producer benefits from some of their competitors quit the market in
having lower cost than its competitors have. It some countries. As a result, IKEA can benefit from
decreases the price of the products below the their experience competitive advantage.
current market price, which may let competitors
leave the market.
As a result, the most experienced producer can
take the market share of others and gain
experience more rapidly. Besides, new customers
are likely to enter the market thanks to lower
price and this can help the producer achieve
economies of scale. However, the strategy for the
other producers is less clear on experience curve
pricing strategy.
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PRODUCT AND CLIENTS MANAGEMENT
