Effectiveness, Advantages and Disadvantages of Products Line Pricing

Alt: = "photo showing hand of someone checking products line price tags"

Introduction

What is Products Line Pricing?

Product line Pricing, also known as product lining, is a retail marketing technique that involves grouping products and services in the same category into different price ranges based on their features and quality. The  separation of  goods and services into price categories is to create various perceived quality levels in the minds of customers.  The pricing technique is often used by retailers in  store to display the products in the same category. Products are displayed according to their quality and features.


The Aim of Products Line Pricing

The aim of product line pricing is to maximize profits by positioning new products with the highest quality and number of features alongside with other products and services with lesser quantity and features where the products with highest quality have highest price tags.  

Another aim of  product line pricing strategy is for a business to be able to offer something to people of all classes when they visit business store. 

Effectiveness of Products Line Pricing

Products line pricing provides alternatives to people of different classes. Buyere usually look at price tags before deciding on which product to buy. If you own a retail store, you must have seen customers checking the price tags before selecting  the products to purchase.

All customers are not equal both in purchasing power and preference. There are some  customers who  want premium quality products at any given price, while there are some who want good quality products which satisfy their needs at affordable prices.

So product line pricing enables a business to offer something to people of all classes when they visit business store. However, Pricing lining without justifying the higher price might create a negative impression on the minds of customers. Therefore, it is necessary to plan the Pricing lining strategy properly before implementing it to maximize profit.

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Advantages of Products Line Pricing

The price lining technique has many advantages for both retailers and consumers.  

  • It is useful for customers with different purchasing power and customers with different needs.
  • Customers can easily choose the products they can afford without the help of the seller.
  • Price lining technique gives consumers options for a single product.
  • Buyers can choose from the range of products according to their  budget and the desired properties of the product. 
  • Adjusting the price is also beneficial for companies as they can generate large profits without making large investments, as is common practice. 
  • Businesses can generate more sales by using this technique, because most of the customers buy products at higher prices as they believe that the higher the price, the better the quality of the product. 
  • Although companies offer multiple products, marketers only need to focus on a single brand. Therefore, the price line reduces marketing and advertising expenses. 
  • Products line pricing strategy helps to reduce inventory because manufacturers know which product needs to be produced more to meet demand. 
  • There are less labour and overhead costs because different products can be made with the same machines and the same work can make products with different characteristics. 

Disadvantages of products line pricing

  • The price line marketing technique is designed with a focus on the price of products only.
  • If the producers generate additional income using the technique, It will negatively affect the sales of the expensive product during inflation, as people can start buying a cheaper product at a low price to reduce costs.
  • Change in market trend or inflation may create excess inventory.
  • It can also have a negative impact on the brand's loyal customers, if they can't find products that are worth their prices. 
  • The products line pricing technique indicates that the company doesn't treat their customers equally as not all customers can enjoy the premium features, and even if they stuck with your branded product, they will not be satisfied.
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