Kotler pricing strategy
Pricing is one of the most difficult decisions facing merchants and business owners, which makes them subject pricing to several factors Strategies Different strategies are used to reach ideal pricing. Among these strategies is Kotler's pricing strategy, which gives you multiple options for appropriate pricing to position your company in the market.
Below we explain what Kotler's pricing strategy is and its types.
What is the Kotler strategy? Kotler for pricing?
It is a set of strategic options to determine your price, through a tool that gives you 9 options based on two elements, namely quality and price point. This tool consists of a matrix with 9 squares through which all pricing options based on the previous two elements are shown, where the company’s products are placed. Competitors' products and based on quality, appropriate pricing is reached.
Product elements on which the pricing strategy is based
In order to determine appropriate pricing through Kotler's pricing strategy, the basic elements in the product to achieve the price are:
- Customers
The customer is the most important part of the pricing process, as he is the one who pays the price that you determine in the end, so you must take into account whether the final price will be acceptable to the customer or not in exchange for the value of the product that he will buy.
- Competitive prices
The customer always compares the prices of a single product offered by several companies. He analyzes the characteristics of similar products, their prices, and the value they provide. Therefore, you must study competitors well to be able to offer products at competitive prices.
- Psychological price
This is called the price effect or the level effect, which is to make the customer see that you care about his financial level, through the trick of not rounding the number, that is, not subtracting a single number for the price of the product, such as changing the price of a product from the correct number, let it be $5 to $4.99, and it works. This trick plays on the customer's illusion that the product is cheaper than other products.
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Types and levels of pricing in the Kotler strategy Kotler
Kotler's strategy includes nine different pricing levels that are based on price and quality, three of which are based on price, three on quality, and the relationship between price and quality results in three other levels.
- Premium pricing
It is the level where the quality is high and the price is high. This level is used in the case of introducing new and innovative products where competition is low. It can also be used if the brand is classified as excellent, in which case the pricing level is naturally distinct.
This level is characterized by high profit margins, and leaves an impression on customers of the high quality of the product.
One of its disadvantages is that it is difficult to maintain in the long term, and it may harm the company's market share.
- High value pricing
The pricing strategy is valuable if the product is of high quality and at an average price. This strategy is the most common among companies in the market that have a large number of competitors and are unable to use the premium price for a long time. One of the positives of this level is seeing the good value of the product. By the customer and maintain high profit margins for a long time.
- Great value pricing
It is the best way to achieve the highest rate of growth within the market, as this level adopts a low price and high quality, and this type is used to gain market share or attract a larger number of customers. This pricing is characterized by its ability to cause rapid growth in the market, yet it is fraught with risks in the long run. the long.
- Good value pricing
Good value pricing is when the quality is average and the price is low, which is the least risky level of all and increases market share through good price and value.
- Average pricing
It is an average level of quality and price, which is what the customer can expect and how good the product is, but this level will not help you achieve market share growth.
- High pricing
This is when the product is of medium quality and high price and is used by major brands. This level helps you achieve a high profit margin, while it may harm the company’s reputation due to the low quality compared to the price.
- Economic pricing
This level occurs when the quality is low and the price is low, and it is the level that is difficult to compete with others, but this level will not be the best for achieving high margins, nor will it succeed if competitors reduce their prices as well.
- Incorrect economic pricing
False economics occurs when we offer a product of low quality and average price, and although it may achieve a good profit margin, it may expose the company's market share to risk and loss of commercial reputation.
- Rip Off level
It is the worst for your brand, as the price is high and the quality is low. Despite the possibility of achieving high profit returns, it may harm the brand’s reputation and cause the loss of market share and customers together.
Therefore, Kotler's pricing strategy is a marketing strategy through which product prices are determined based on the market environment and competitors. This strategy also helps you improve and develop products and organize them in a good way that is compatible with consumers' desires.
