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.

Pricing Strategies
These are adopted over the medium to long term to achieve marketing objectives They have a significant impact on marketing strategy.

Pricing Tactics
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)

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Q&A - Outline what is meant by cost-based pricing [2 Jan 2011]
Q&A - Outline how market research can help a business set its prices [2 Jan 2011]
Q&A - Distinguish between price and cost [2 Jan 2011]
Q&A - Should a business use a “loss leader” as part of its pricing tactics? [31 Dec 2010]
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Video case study - substitute goods benefiting from the recession [1 Feb 2010]
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Revision Presentation - Revenues and Demand [30 Dec 2009]
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Q&A - Explain what is meant by price positioning [21 Dec 2009]
Q&A - What factors should a business consider when setting its prices? [19 Dec 2009]
Q&A - How does pricing link to the objectives of a business? [19 Dec 2009]
Q&A - What is price and why is it so important in the marketing mix? [19 Dec 2009]
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Milk co-operative turns sour [4 Jun 2009]
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Q&A - How are businesses affected by changes in interest rates? [1 May 2009]
Q&A - What goes into the “marketing mix”? [1 May 2009]
How can the same product be cheaper to buy new than second-hand? [16 Apr 2009]

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