ii) Premium Pricing: this strategy is used by a firm that has heterogeneity of demand for substitute products with joint economies of scale. Consider the example of a colour television set. There are different models available with different features, like the one with a remote control and another without it. Both are substitutable and satisfy the customer needs. But the firm may opt to premium price the first model and position it as the top of the product line for high income or upper income group of customers or for whom communicating that “they have arrived” is important.
iii) Image Pricing: this strategy is used when consumers infer quality from the prices of substitute models or competing products. The firm varies its prices over different brands of the same product line. This strategy is commonly used in textiles, cosmetics, toilet soaps and perfumes.
iv) Complementary Pricing: this strategy is used by a firm that has customers with high transaction costs for one or more of its products. Transaction costs are all those costs that a customer has to incur to buy the product, like the registration fees that a flat buyer has to pay in order to be a legal owner or the processing fees that the bank may charge to give a credit card to the customer.
v) Captive Pricing Strategy: here a special price deal is offered to loyal customers or those who are regularly buying one of the products of the firm. A typical example is the Gillette shaving system, which offers two twin blades free with its razor to induce the buyer to purchase its blades. Kodak adopted this strategy, when it offered a film roll free to all buyers who bought its camera. As may be observed this is a strategy aimed at building customer loyalty.
vi) Loss Leader Strategy: this is another example of complementary pricing strategy. This strategy involves dropping the price on a well-known brand to generate demand or traffic at the retail outlet.
vii) Two-Part Pricing: this strategy is used by products that can be divided into two distinct parts. For example, membership of a video library has two parts – one is the membership fee, which is annual and the other is rent for each time frame for which a videocassette is rented. As may be observed the price has two components, the fixed fees and the variables usage fees.