Q&A - What is the difference between pricing strategies & tactics?
Pricing is a very powerful weapon in marketing, but there are many different ways to use it to help achieve marketing objectives. It is important to make a distinction between pricing strategies and pricing tactics.
These are adopted over the medium to long term to achieve marketing objectives They have a significant impact on marketing strategy.
These are adopted in the short run to suit particular situations.
Tactics have only limited impact beyond short-term sales of the product itself. It may also be that the pricing strategies a business can implement are constrained by the competitive position of the business.
It is often said that there are four categories of position a business can find itself in which influence the control it has over pricing:
Price takers - A business has no option but to charge the ruling market price
Price makers - The business has a strong enough competitive position to be able to fix its own price – either higher or lower than the competition
Price leaders - Market leaders whose market share is so strong that its price changes are closely followed (and often copied) by rivals
Price followers - A business that just follows the price-changing lead of the market leader (ignoring the rest of the competition)
Join the tutor2u Business team for a resource-packed day designed to fast-track your lesson planning and preparation for the new Edexcel A Level Business specification. We'll look at the key changes in teaching content, explore the new challenges of teaching this linear specification and dive into some brand new teaching resources designed specifically for the new Edexcel A Level Business course from September 2015.