Market penetration pricing strategy
Source: Shangpin China |
Type: website encyclopedia |
Time: 2015-06-18
（1） Overview of market penetration pricing strategy Market penetration pricing strategy, also known as low price pricing strategy, refers to Beijing website construction At the initial stage of the product launch, the price of the product is set at a lower level, so as to get consumers directly, open up the market and occupy the market. This is a pricing strategy aimed at pursuing market share and obtaining long-term benefits. The market penetration pricing strategy is similar to the free pricing strategy. First of all, it meets the requirements of consumers for low expected prices of online products, which is convenient to open the market like a free pricing strategy. Secondly, low prices are not free after all, but profitable. The direct purpose of low price in online marketing is to make small profits and sell more quickly. If the price is set lower, the sales volume will increase, because ordinary consumers have the mentality of pursuing low prices, which can achieve economies of scale. It can be seen that the market penetration pricing strategy is a highly competitive pricing method, which can attract customers, make the store appear prosperous and quickly occupy the market. In particular, clothing stores specializing in wholesale mostly adopt the market penetration pricing strategy to achieve the effect of small profits but quick turnover by giving away profits to intermediaries. In order to create the impression of popular parity, some enterprises use the slogan of "everyday parity" to attract customers. For example, Wal Mart in the United States is a very successful example of implementing the market penetration strategy. Wal Mart pursues the business strategy of "low price every day, small profits and quick turnover". Among similar products, Wal Mart's price is 5% lower than that of its largest competitor, Kmart. Its loud slogan "The goods sold are always the lowest price" once attracted many consumers. （2） Applicable conditions for implementing market penetration pricing strategy The primary purpose of implementing the market penetration pricing strategy is to open the target market and increase the share of the target market. However, maintaining long-term low prices is not an easy task. It requires strong support from enterprises in management, cost and other aspects, otherwise it is difficult to persist. Therefore, simply implementing the market penetration pricing strategy is not a long-term solution. For enterprises, the market penetration pricing strategy can only be implemented for certain products that are suitable for implementing the market penetration pricing strategy, and other product prices can be formulated in combination with other pricing strategies to facilitate the development of enterprises. The conditions suitable for implementing the market penetration pricing strategy are as follows: 1. In order to open a product market and maintain the target market share, market penetration pricing strategy should be adopted This is the primary purpose of implementing the market penetration pricing strategy. For example, for electric appliance enterprises with fierce competition, every time they launch a new electric appliance product, the enterprise often attracts customers' attention through market penetration pricing strategies such as promotion and discount, so as to urge customers to buy the product. For daily commodities such as soap and toothpaste, in order to maintain a high market share, it is also appropriate to adopt this market penetration pricing strategy for a long time. For example, Henan Zhoukou Monosodium Glutamate Factory, whose products won the "Gold Medal of the First National Food Expo" and the "Gold Medal of the 12th Paris International Food Expo", adopted the strategy of no price increase, that is, the disguised market penetration pricing strategy, when the prices of the same industry in the country rose in succession, so that the factory moved from heavy mountain recovery to bright future. 2. Products suitable for online retail sales find another way to implement market penetration pricing strategy Because Internet sales reduce the cost of sales channels, and the price information of online products is open and easy to search, generally speaking, online sales prices are lower than popular market prices. The "group buying" that can be realized without leaving home on the Internet has contributed to the small-scale economy of group buying. 3. Mass production of products that can significantly reduce costs is also suitable for market penetration pricing strategy For example, clothing, ordinary household appliances, etc. can achieve economies of scale, economies of scale reduce the unit cost of products, and cost reduction makes it possible for enterprises to implement market penetration pricing strategies. 4. Market penetration pricing strategy is suitable for commodities with greater demand elasticity Because the target customer group of products is extremely sensitive to the price of products with high demand elasticity, the price of these products is closely related to the sales volume. If the price is set lower, the sales volume can be rapidly expanded, and high sales volume can bring high profits. 5. In order to extend the life cycle of the product, the market penetration pricing strategy can also be adopted Due to the fierce competition of products and the acceleration of people's life rhythm, the life cycle of products tends to shorten, especially in the network market. The implementation of market penetration pricing strategy in the recession period of products can maintain the original market share as much as possible and obtain the residual profits of the products. （3） Types of market penetration pricing strategies There are many kinds of market penetration pricing strategies, including direct market penetration pricing strategy, discount pricing strategy and online promotion pricing strategy. 1. Direct market penetration pricing strategy The direct market penetration pricing strategy refers to the use of cost plus lower profits, some even zero profits, when pricing. Therefore, this kind of pricing is lower than that of similar products when the price is open. The basis for adopting the low price strategy is the reduction of product costs. By using the Internet, enterprises can save a lot of costs, in order to open the market for new products. It is generally the pricing method used by manufacturing enterprises for online direct sales. For example, Dell's computer pricing is 10%~15% lower than that of other companies with the same performance. 2. Discount pricing strategy The discount pricing strategy refers to the pricing based on the original price. This pricing method can let customers directly understand the price reduction range of products to promote customers' purchase, and often can stimulate customers' desire to purchase. This kind of pricing strategy is mainly used in some online stores, which generally discount pricing according to popular prices on the market. For example, the book price of 8844 is generally subject to discount, and the discount range is 1-2%. There are three specific discount pricing strategies: quantity discount, seasonal discount and cash discount. (1) Quantity discount. When determining the price of goods online, enterprises can give different discounts according to the quantity standard of goods purchased by consumers. The greater the purchase, the greater the discount. In practical application, its discount can adopt the non cumulative quantity discount strategy of accumulating every purchase and giving discount only according to the size of one purchase. For example, online group buying can realize large discounts, which is also a big temptation for wholesalers. (2) Seasonal discounts. For products with strong seasonality, it is not necessary to be superior to the source of customers in the peak season, but there is too much difference in the off-season. In order to stimulate the sales of products or services in the off-season, seasonal discount strategies can be adopted to encourage middlemen to purchase goods in the off-season or encourage consumers to purchase in the off-season. It can also adopt the strategy of raising the price in the peak sales season and lowering the price in the off-season. For example, it is hard to get a full price ticket for popular routes on holidays, but in the off-season, the same ticket will be discounted 4-6%, or even lower. (3) Cash discount. In B2B e-commerce, due to the lack of online payment at present, in order to encourage buyers to purchase with cash or pay in advance, they often give a certain cash discount when pricing. For example, the transaction price of a commodity is 500. The transaction terms indicate "2/20, net price 30", which means that if you pay within 20 days after the transaction, you can enjoy a 2% cash discount, but you should finally pay the full amount within 30 days. 3. Online pricing strategy Due to the wide range of online consumers and their strong purchasing power, many enterprises have adopted online promotion pricing strategies in order to expand the online market and promote new products when the product price does not have a competitive advantage. In addition to the discount strategy, promotional pricing is commonly used for bonus sales and incidental sales of tengpin, which often have obvious effects. For example, in the "May Day", "National Day", "Spring Festival" and other festivals and holidays, the sales promotion activities are popular, and the business performance is not small, which is all due to the promotion strategy. （4） Precautions for market penetration pricing strategy The market penetration pricing strategy has brought tangible benefits to many enterprises, but the following points should be noted when adopting the market penetration pricing strategy: (1) Mass consumers generally believe that buying goods online is cheaper than buying goods from the traditional market, so it should be in line with the public psychology. Enterprises should not sell products online that are price sensitive to customers but difficult for enterprises to reduce prices. (2) When publishing prices online, enterprises should pay special attention to distinguishing consumers. It is best to distinguish between general consumers, retailers, wholesalers and partners, and provide different channels for publishing price information. Otherwise, marketing channels may be confused due to market penetration pricing strategy confusion. There is a hidden means on the Internet - price comparison mechanism, that is, a website has a price comparison button next to the searched goods in order to ensure its lowest price. After customers press the button, the website will automatically compare prices to ensure that customers find lower prices. (4) When new products are first launched, the price cannot be set too low, otherwise, when the price needs to rise due to cost changes in the future, the enterprise will be difficult to obtain customer understanding, thus affecting sales. (5) When using the market penetration pricing strategy, enterprises need to pay attention to the novelty of the style and the quality of the product, so as not to give consumers the mentality of "cheap but not good", thus affecting the overall image of the enterprise. For some high-end clothing, such as high-class dress, wedding dress, boutique clothing, etc., this pricing method is generally not suitable.
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