When setting prices, companies have a choice of several strategies to apply to their business. However, the choice of strategy should be preceded by a market analysis and a competitive analysis, among other things.
Cream-picking strategy – Initially introduce intentionally high prices for a relatively short period of time, but gradually reduce prices as competition arrives. This strategy is often chosen for new products, luxury goods, and branded products.
Premium (prestige) pricing strategies –introduce higher prices for a somewhat longer period of time over the entire product life cycle. Price penetration strategies –use low prices and thereby attempt to achieve high market share and high turnover, thereby increasing production and lowering unit costs. However, the effectiveness of this strategy depends primarily on the price elasticity of demand, the firm\’s adequate production and distribution capacity, and the competition that may arise from price competition.
Standard (uniform) pricing strategy –means that global prices remain the same regardless of customers. This strategy can only be applied when market transparency is complete and firms have sufficient information about competitors\’ marketing activities.
Dual pricing strategy – means applying different prices to domestic and international customers.[52] [53] [54] Transfer pricing – [55] [56] [57] refers to subjectively determined prices charged by companies for goods and services between their business units located in several countries. The main reason for its application is to protect against the risks of foreign markets
Emergence of gray markets –Can occur when the price difference is greater than the cost of transportation between two countries. Is the difference caused by fluctuations in the value of the currencies between the two countries, or are there large price differences between countries?
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