Column 8 · Marketing Programs · Era 3, Competitive Advantage (1980s)
Pricing Strategy
Implementation, content · Major · Cluster III, Organization and Programs
Description
Tellis integrated the many pricing strategies into a taxonomy organized by the firm's objective and by shared economies among customer segments or products, showing how strategies such as skimming, penetration, and bundling relate.
Managerial Implications
Pricing is a strategic choice set, not a cost-plus calculation: skimming, penetration, bundling, versioning, and segmented pricing each fit different customer heterogeneity and competitive situations. Choose a pricing strategy by asking what customers value differently and what competitors can match. Price is the most powerful and most neglected profit lever; a one percent price improvement typically beats a one percent cost cut.