What alternative approaches are available to marketers to price products?

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Psychological Pricing Strategies


CASE ASSIGNMENT Write a paper of no more than four pages in which you complete the following assignment: Using the teaching materials and any additional research, explain what you think would be the most appropriate pricing strategy - and why - for TWO branded products selected from the following list. In doing so compare and contrast the two pricing methods explaining why you think they would be similar or different.: MEDIA DISTRIBUTOR (e.g. Netflix) FROZEN VEGETABLES ASPIRIN (or any over the counter painkiller) ASSIGNMENT EXPECTATIONS In answering this case question, aim to demonstrate your learning not only of the materials from MOD05, but also those from MOD01-04. You may well wish to illustrate your arguments using estimates of costs and other figures for the products you have chosen. In that case it is quite accetable to invent some reasonable numbers rather than takime to research them. Place any detailed calculations in an appendix, (not counted in the page limit), after the references. Please submit your case for grading by the end of this module. It is expected that you will use information from the background readings as well as the case articles and any good quality sources you can find. Please cite all sources and provide a reference list at the end of the paper. The following will be assessed in particular: Your demonstrated understanding of the marketing concepts central to the case question. Your demonstrated understanding of factors related to the development of an effective pricing method through the analysis you conduct in the context of the case.

Module 5 reading material:


Having developed an understanding of how consumers make purchase decisions, and how marketers analyze markets and select targets, we turn our attention in Modules 02-05 to how firms can win and retain customers and here in Module 05 we focus on the final element of the Marketing Mix, Price, what it costs the customer to own our product.  Note that this conception of Price, rather than "What we charge the customer", more usefully represents the customer-oriented perspective taken by marketers.

This raises a number of questions such as:

  • What alternative approaches are available to marketers to price products?
  • What factors do marketing managers take into account when setting a price?

The materials on this page as well as in the case have direct relevance to those questions and the fifth and final part of your SLP.

For both the case and the SLP, the following materials have been provided:

Resources for all modules:

1. The course designer has prepared background materials for each module that can be accessed through the presentations link at the top of each page.

2. An extensive glossary of marketing terms can be accessed at

Marketing Power Dictionary (2011). American Marketing Association.. Available May 31, 2013 at 


3. The following reference covers a range of marketing topics:

Marketing Made Simple. (n.d.). Available May 31, 2013 at


Module 5 Readings

Christ, P. (2011). Principles of Marketing. Available August 30, 2012 from KnowThis.com. Review the following chapters: 

  • Pricing Decisions 
  • Setting Price 

Available May 31, 2013 at 


Rev. May 31, 2013

Freemium and Psychological Pricing StrategiesNameInstitutionFreemium and Psychological Pricing StrategiesNetflix Inc. is a company that deals with the provision of on-demand Internet streaming media that is available in many parts of North America, South America, the United Kingdom, the Caribbean region and several countries in Europe. The company developed a system to provide video on demand streaming via the internet.The company’s best pricing strategy method would be to employ a Freemium pricing strategy. In this strategy, the company offers certain basic products for free and then the customers will have to pay a premium to get the full or advanced features that are related to the commodity. The strategy will be very helpful in helping the company sell their name by attracting users who are cost-conscious (Schindler, 2012).The company is an online-based enterprise, so they have to make sure that their website is visited regularly. The company will have to come up with a strategy that will ensure that their site will have constant traffic. The company’s best strategy would be to post free trailers that potential customers can come and visit their website. After watching the free trailer, the customers will be required to pay to get the full video that he or she demands.This pricing strategy is very helpful to the company as their website will have a lot of visitors who will visit the site for the free content. The free content means that the company will have the free conten...

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