Comparing Pricing Strategies Essay

Firstly, Wendy’s uses many different types of pricing methods to attract customers to buy their food items. One of the strategies they use is price discrimination (same product sold in different markets at different prices) by offering discounts to seniors for 10% and children with a hamburger Kid’s Meal for only $2. 69. Wendy’s also uses promotional pricing (charging a low price to entice customers and to build brand awareness) by presenting discounts such as “$1. 00 off on any premium salad”.

These strategies allow Wendy’s to stimulate customers into buying their food items. The next store that was examined is Sears. They use a pricing strategy called Penetration pricing (setting a relatively low price to gain brand recognition and market share). Sears decided that it will launch an “outdoor casual wear” line for men and the starting price for fleecy jackets and thermal sweaters only start from $20. 00. As the products reach the growth stage and mature; the prices will increase.

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Sears seems to be also using loss leader (selling a product at or below its cost value) because they allow customers to bring in a competitor’s store ad and purchase the item in their store for the competitor’s lower price. Similarly, Wal-Mart does this too. The next company is Old Navy that also benefits from a variety of pricing strategies.

Similar to Wendy’s, Old Navy uses promotional pricing by offering discount coupons (Example – 25% off on any purchase for a limited time) to attract the customers because they will only get this discount for a limited time.This can encourage them to take action faster and purchase the product. However, their main strategy is psychological pricing (using numbers such as $9. 99 or $14. 995 to make prices seem lower than $10.

00 or $15. 000). Most of their products use this type of pricing; for example, Old Navy sells Women’s winter jackets for $49. 99 instead of $50.

00. By doing this, customers feel as if they are paying a lower price and this can benefit the company. The last company that was examined is Future Shop.

The first pricing strategy it uses is skimming pricing (initially setting a high price to recoup the costs of research and development). For example, Future shop set its price for the Iphone 5 initially at $199. 99, but however now Future Shop sells them for $179. 99.

The second strategy it uses is going rate pricing (firm chargers a similar price to that of competitors for their goods or services). Future Shop’s biggest competitor Best Buy sat its price for the Apple Macbook Pro at $1,139. 99, and similarly, Future Shop decided to do the same. They both charge $1 for their electronic retail shores charge.