Pricing Strategies Analysis

Penetration Pricing- Netflix

This method of pricing is where the price of the product or service is initially set low to draw in a larger clientele all at once. For Netflix, their standard plan prices originally start at $13.99, and have recently been increased to $14.99. Some of their other plans have also seen an increase in its price due to its high demand and popularity it has achieved from its originally low prices. Netflix gained its global popularity from the word of mouth from customers sharing its great quality for low prices that tended to beat its competition. Penetration pricing is a suitable strategy for Netflix because it draws large groups of people to purchase a subscription that has quality services. Since it is a great quality for the price, they create a loyal customer base that is willing to keep their subscriptions even when prices rise.

Skimming Pricing- PlayStation Gaming Console

This method of pricing is where the price is set initially high at first, and then lowers over time to find out who is willing to pay for that product or service. For Sony, they have priced their gaming consoles at initially higher prices when the product is first released because of its higher demand. As the consoles become less demanded, they skim the prices to be something that consumers are willing to pay, even if they only skim a few hundred dollars off. Skimming pricing is a suitable strategy for Sony and their PlayStation because it allows for the frequent selling of the product instead of lost sales because of a high price and no demand. The main issue with skimming products is that many people tend to wait to purchase these products till they are at their lowest possible price which results in lost potential profit.

Bundle Pricing- Cineplex Movie Combos

This method of pricing is where the company sells a set of goods at a lower price when purchased together, rather than when purchased separately. For Cineplex movie theatres, they have food and drink combos advertised at lower bundled costs compared to when you buy the items individually. They provide customers with a variety of combos to suit their needs at a reasonable price to entice purchases of larger quantities. Bundle pricing is a suitable strategy for Cineplex movie theatres because when customers see that they can receive more for items for cheaper prices, they are encouraged to purchase them. When families come to the movie theatres together, it is also cost friendly for them to buy the bundled items.

Psychological Pricing- BestBuy TV’s

This method of pricing is the theory where prices have a psychological impact of being lower when they end in 99 cents or lower. For BestBuy, they tend to price their TV’s at having 99 cents. Even with their Black Friday deals going on, they tend to price their TV’s similar to $1999.99. Even though this price is a cent away from being $2000, many people see the 1 and it tricks their brain into thinking it's closer to $1000. Even though BestBuy has used the psychological pricing method, it most likely wasn’t the most effective option. Psychological pricing isn't a suitable strategy for BestBuy because of their already high prices are harder to be convinced of being a great deal because of the amount of 9’s being used. Since 9 is a high number and already tricks the brain into being more expensive, the more you use them in the price, the less effective this method is. If they priced it at $1999 instead of having the 99 cents, they would get rid of unnecessary 9’s tricking the mind.

Prestige Pricing- Harvard University Tuition

This method of pricing is where prices are set high so that consumers associate the price with high quality items. For Harvard University, their tuition is greatly higher compared to regular university tuitions. It is considered an elite and prestige university because of what it has to offer as well as the prices. Thousands of students are still willing to pay their intense university tuitions because they associate its cost with its high-quality benefits. Students are even willing to go into debt to just be a part of its community and experience. Prestige pricing is a suitable option for Harvard University tuition because of its reputation of being a high-class institution. The high prices associated with its tuition is something that its attendees are willing to pay to be a part of.

Yield Management Pricing- Car Rental Agency

This method of pricing is where prices are set on consumer behavior to maximize its potential revenue. For car rental agencies, their prices tend to vary on account of many things. A car rental might be more expensive for someone who needs a car right away during a time where there are limited rental options or might be cheaper for someone when the agency hasn’t had many clienteles recently. Their end goal is to maximize their potential revenue; however, they have a lot of flexibility in their prices. Yield management pricing is a suitable option for car rental agencies because of their ability to bring in the most revenue possible. However, it isn't a fair method that consumers enjoy since it can have little structure to its pricing set up. Consumers may be referred because they heard of low prices, and then might be asked for double to rent. This can cause a lot of dissatisfaction from a consumer toward the agency.

Reference List

Hess, Abigail J. (2019, April 08). It costs over $70,000 a year to go to Harvard-but here's how much students actually pay. Retrieved November 20, 2020, from https://www.cnbc.com/2019/04/05/it-costs-78200-to-go-to-harvardheres-what-students-actually-pay.html

Ahearn, V. (2020, October 08). Netflix Canada is increasing its monthly subscription rates again. Retrieved November 20, 2020, from https://www.cp24.com/entertainment-news/netflix-canada-is-increasing-its-monthly-subscription-rates-again-1.5137582

Our Signature Popcorn. (n.d.). Retrieved November 20, 2020, from https://www.cineplex.com/Theatres/FoodAndDrink?cmpid=MainSubNavEN_food-and-drink

Samsung 82" 4K UHD HDR LED Tizen Smart TV (UN82TU7050FXZC) - 2020 - Titan Grey - Only at Best Buy... (n.d.). Retrieved November 20, 2020, from https://www.bestbuy.ca/en-ca/collection/tvs-on-sale/79094?cmp=knc-c-71700000055463811-k-43700045992234156

Sivakumar, B., & Bharath Sivakumar. (2020, February 14). Price Skimming: Definition, Strategy, & Examples. Retrieved November 20, 2020, from https://www.feedough.com/price-skimming-definition-examples/

Yl964@cornell.edu. (2013, March 27). Retrieved November 20, 2020, from http://blogs.cornell.edu/armapp/2013/03/27/rental-car-industry/