Discuss the various types of product mix strategies.

1. Product Line Pricing
Companies usually develop product lines rather than single products. Involves setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices.
The customers associate the price steps within the product line with the differences , benefits or quality. The price steps should take into account cost differences between the products in the line, customer evaluations of their different features, and competitors' prices. In many industries, sellers use well-established price points for the products in their line. Thus, men's clothing stores might carry men's suits at three price levels: ksh 1850, 3250, and 4950. The customer -probably associate low, average, and high-quality suits with, the three price points. Even if three prices are raised a little, men normally will buy suits at their own preferred price points . The seller's task is to establish perceived quality differences that support the price differences.
2. Optional-Product Pricing
Involves offering to sell optional or accessory products or features along with their main product. For example, refrigerators come with optional ice makers. Companies have to decide which items to include in the base price and which to offer as options. For instance , a car dealer can sell a standard car without options at a much lower price but at a higher price one with options/”extras”. Restaurants also use this strategy in pricing their products e,g, either high liquor/alcohol prices and lower food prices or vice versa where one acts as a traffic builder to the restaurant .
3. Captive-Product Pricing
Involves setting low prices for products that must be used along with certain supplies but setting high prices for the supplies. Example: Kodak often price their cameras low and set high mark-ups on the supplies such as films etc . The company makes money/profit from accessories and not the main product. The firm must decide how much to charge for the basic product and how much for the accessories/supplies . The price of the basic/main product should be low enough to induce usage of the supplies
4. By-Product Pricing
It is used where manufactured products have by-products. If the by-products have no value and if getting rid of them is costly, this will affect the pricing of the main product. Using by-product pricing, the manufacturer will seek a market for these by-products and should accept any price that covers more than the cost of storing and delivering them. This will enable the seller to reduce the main product’s price to make it more competitive.
5. Product bundle pricing
It is a promotional pricing tactic that seeks a price for a set of products (bundle/package ) at reduced prices to induce customers to buy. The sellers often combine several of their products and offer the bundle at a reduced price. The strategy offers customers more than product in a single package for a special price e.g. buy one get one free. Decisions have to be made on unbundling and rebundling the products. Price bundling can promote the sales of products consumers not otherwise buy, but the combined price must be low enough to get them to buy the bundle. For example, restaurants bundle a burger, fries, and a soft drinks at a combined price. Theaters and sports teams sell season tickets at less than the cost of single tickets. Resorts sell specially priced vacation packages that include airfare, accommodation meals, and entertainment. And computer makers include attractive software packages their personal computers.

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Lellah answered the question on November 8, 2021 at 05:01