Posted: October 26th, 2022


segmentation x


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Pricing Strategies

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Pricing strategies

Price segmentation

A pricing strategy is a pricing strategy where various prices are put in place for the same product or service


These prices are based on the customer’s ability to pay for the service. Various ways determine the prices in segmentation strategy, time of purchase, service offered, and channel of receiving the service. Mandai Zoo, which changed to Singapore zoo, can implement this strategy to improve the profits. Setting different prices based on specific factors. During holidays, there is the tendency of many people to visit the zoo hence high prices. COVID-19 has made many not to be able to travel to various destinations. The establishment of virtually touring the world is a great idea. This is a platform where clients can travel to the zoo without traveling to the destination. Providing such service at a lower price than those traveling physically can encourage many customers, especially the elderly and physically challenged. They also get the chance to chat with the animal keepers to obtain every bit of information they need (, 2021).

Price fences

This strategy prevents clients from taking advantage of the lower price segment. This is achieved by establishing rules and regulations, especially on offers. The tools used to restrict customers from shifting from one segment to another is what we call fences. Fences are based on the pattern of service purchased and the characteristics of the service. Mandai zoo can identify ways on how to fence the prices. Charging children a lesser entry fee amount and a higher amount on the adults is one way to prevent confusion and spillover from higher price segments to lower-priced segments (Peeris, 2020).

Providing extra services to the zoo’s physical visitor is one fence that can distinguish them from virtual clients. Physical visitors having to pay higher price needs makes them expect more and better experience than the virtual. Therefore, the management needs to provide extra services such as providing snacks, Free internet connection, and taking pictures without paying extra cost during the tour. The zoo may make high-prices be imposed on weekends since many visitors visit the weekends. Slightly Lower prices on weekdays may encourage the visitors without busy schedules to create time to visit on the weekdays. This cannot cause spillover since it is clear that most of the population in Singapore and worldwide have busy schedules during weekdays. Providing comfortable hotel rooms for the tourists with different level of luxury also may be one strategy to justify the dissimilarity of prices (Zhang & Bell, 2010). The restrictions enable the customers to segment themselves in the right segment. This helps the industry effectively identify clients who are willing to pay for the services they can afford and not take advantage of lower prices.

Psychological Value drivers

Satisfaction is a key driver in estimating a product or service’s psychological value. There is a need for much research on the zoo to quantify each price they charge for every service they offer to customers. Conjoint analysis is a tool used to estimate psychological value quantitatively by identifying the customers’ willingness-to-pay. This enables the customer to decide what they can pay and hence receive the services worth their amount. Value drivers are characteristics that improve the customer’s perception of services provided by the industry. The zoo may have different locations or spaces that have different prices. The customers will have an opportunity to choose where they are willing and able to pay. Value drivers also convince the customer that the services provided are better than the rivals (Guillet, 2014).

Singapore zoo management should research to determine whether all they would prefer in the zoo is not received. This will help incorporate changes in the zoo, helping customers be satisfied with the services. Acquiring a zoo guide to take the customer around the zoo, explaining to the customer, and answering questions should be slightly expensive than without. The customer will only pay for what they can and enjoy the same places. Psychological value drivers define the monetary value of each service the customers receive (Claessens, 2020).

Part b.

Price skimming

The tourism industry should set their price according to the services’ demand. This will help to understand the customer situations such as pandemics. When the demand is low, the prices for the services should be made lower, and when the demand is high, the prices should be slightly high. This strategy makes the tourism industry work to increase demand. They do so by introducing new and better services and experiences to attract customers. One of the advantages of price skimming is that it improves investment returns. The industry can make huge profits when the prices are high, and the demand is high. Skimming also helps to create and maintain the image of the brand. Skimming pushes the industry to introduce better and unique services and products. This hence attracts customers and customers and creates the perception that the services are of high quality hence high prices.

Price skimming also helps to segment customers based on their ability to pay. When the prices are higher, only those with the ability to pay can enjoy the service. Lowering of prices allows more price-sensitive customers. This helps the company to enjoy a diverse range of customers. Contrary to the benefits of this strategy, it also has limitations. Price skimming does not work for industries whose demand curve is elastic. It is not an effective strategy in the highly competitive market since high prices may scare many customers and shift to other companies. Skimming also attracts many competitors since they may provide cheaper products and services.

Penetration pricing

This is where a company sets a lower price during the entry into the market and later increase the price. This strategy helps attract customers to a new venture and feel what they can offer. If the company provides better products or services, it won’t lose the customers even if the prices go higher. Penetration strategy applies to product or service differentiation when the company is new in the market or where a product is suitable for a large market (Corporate Finance Institute, 2020). This strategy attracts customers during the entry into the market by giving offers and discounts on products and services. The main aim of penetration pricing is to introduce consumers to the new product, create a market and build the bland’s loyalty


The penetration pricing strategy can perfectly fit in Singapore’s zoo. The management can introduce value added products to attract customers. They can introduce kids’ playground where they can have fun while the adults walk around to watch animals. Penetration pricing similarly has its own disadvantage. Lowering the price too low may attract customers at first, but customers may run away when prices go high and may perceive that the lower prices meant that the product was not of much value, which decreases the bland perception. This strategy causes potential price wars in the market.


Claessens, M. (2020). Estimating differentiation value – Monetary value and psychological value. Marketing-Insider. 

Estimating Differentiation Value – Measuring Monetary and Psychological Value

Corporate Finance Institute. (2020). Penetration pricing – Definition, example, advantages, and disadvantages., F. (2021). Improve your pricing strategy with price segmentation. Subscription Management & Recurring Billing Blog | Fusebill.

Guillet, R. (2014). International Journal of Contemporary Hospitality Management. Home. ;jsessionid=5A367E6D7CCE75814D643FE522464F44?sequence=1

Peeris, J. (2020, September 25). Going virtual: COVID-19 pushes tourism players, visitors to adapt to a new reality.

Zhang, M., & Bell, P. (2010). Price fencing in the practice of revenue management: An overview and taxonomy. ResearchGate.

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