Price Quality Strategy Matrix

The pricing strategy matrix describes four of the most common strategies by mapping price against quality. Product quality leadership objective.

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A pricing strategy refers to the method businesses use to decide the right price for their services or products.

Price quality strategy matrix. The matrix quadrants show. This is the high value strategy where a higher quality product is provided and more. By determining the position of your products or services relative to the competition retailers can use the price and quality of each item to identify where they stand in the market.

This pricing strategy plays with the psychology of a customer. Pricing does not need to be high for higher positioning. A premium strategy top left is used for this objective.

Of course this knowledge can then be incorporated directly into your decision making process when it comes time to devise a pricing strategy. Typically there are few competitors and a strong brand driving demand so a higher price can be set. What is the price quality matrix.

According to the price quality strategy matrix when a company overprices its product in relation to its quality it is considered to be using which type of strategy. He called it the nine quality pricing strategy since it is a matrix covering nine options. Our summary below reviews the most frequently used strategies based on the different objectives.

Using kotler s pricing model to review positioning this model relating pricing for a product or service to the quality delivered may not be as familiar as some other marketing models we have covered in our classic marketing model series although it was created by author philip kotler. Setting the cost of a ring at 98 for instance is sure to attract more customers than setting the price at 100. The below diagram explains price quality strategy matrix.

What is price quality strategy matrix. The price quality approach of positioning uses the relation between price and quality such that it optimally prices a product according to the quality of the product to keep the product higher in the customers mind. Designed by philip kotler the price quality matrix centers on the cross section between the two metrics that lend the model its name.

Maximum current profit objective. Economy pricing setting a low price for low quality goods. This chart shows an important concept or a framework to help one run their business improve company s strategy internal processs enhance project management technology and client experience.

As you can see in the price quality matrix whether to keep your prices high or low can be decided on how the customer perceives the competition. Penetration pricing initially setting a low price for a high quality product and then increasing it. The pricing strategy matrix is a tool that s used to determine the best price for a product or service.

If the competition is offering high value products at a high price then you can penetrate the market by having a lower price. Almost all organisations base their prices on the costs of production labour and marketing to which they then add a certain percentage to make a profit. This pricing strategy creates an impression of exclusivity and high quality when your product is first launched in the market.

The nine pricing strategies are shown below relating price against quality.

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