Premium pricing strategy
It is used to maximize profit in areas where customers are happy to pay more. The practice is intended to exploit the tendency for buyers to assume that expensive items enjoy an exceptional reputation or represent exceptional quality and distinction
Example: Louis Vuitton, Rolex, first class air travel, luxury hotels etc. are products and services applying a premium pricing strategy.
Supermarkets often have economy brands for soups, spaghetti, etc. Budget airlines are famous for keeping their overheads as low as possible and then giving the consumer a relatively lower price to fill an aircraft.
Two groups of buyers; those seeking quality and those seeking price.
One example of an overcharge situation involves the occurrence of a natural disaster. If a flood devastates a community, the displaced residents will seek living accommodations in surrounding communities that were untouched by the disaster. If hotels and realtors choose to increase the rental rates for their accommodations as a result of the increased demand caused by the flood, this would amount to the implementation of an overcharge.
Condition in implementing market skimming;
Should have its unique identity so that the competitors cannot imitate the product and satisfy the quality to its cost.
Companies sometimes use this technique when offering a new product, such as a new technology, to encourage customers to try the product.
Product-Mix Pricing Strategy
Product Line Pricing
Price based on the difference between products to another (distinction)
Example; car model that has various model types that change with performance and quality.
Optional Product Pricing
Example: a car buyer may choose to order an in-car entertainment system and bluetooth wireless communication.
Captive Product Pricing
Staples, computer software, or camera film, bat and...