6.6 : Pricing Strategies

The two key pricing strategies in marketing are EDLP-Everyday Low Pricing Strategy and High/Low Pricing Strategy.

1. Everyday Low Pricing (EDLP): Companies consistently set a relatively low price for products in this pricing strategy. The approach is to attract customers who appreciate the simplicity and stability of prices, eliminating the need for constant sales or discounts. Walmart is a classic example of a retailer that uses the EDLP strategy. The benefit of this strategy is that it can build customer loyalty and simplify inventory management. Conversely, it may not generate the same sense of urgency as sales promotions.
2. High-Low Pricing: Unlike EDLP, high-low pricing involves setting prices higher than the competition but offering frequent promotions and discounts. The objective is to attract consumers driven by "bargains" and enjoy the "hunt" for discounted items. This strategy can create excitement and attract large sales volumes during promotional periods. On the flip side, it can also create an expectation for discounts, meaning regular-priced items may be ignored.

Both strategies have pros and cons, and the choice between them depends on a firm's overall marketing strategy, target audience, and product positioning.