The Role of Product Classification in Pricing Strategy
A well-organized product classification system is essential for setting and adjusting prices strategically. Businesses can use classification to segment products into different pricing tiers—such as economy, mid-range, and premium options—to cater to a variety of customer budgets. For instance, a company that classifies its products based on quality (e.g., basic, standard, and deluxe) can set differentiated prices accordingly. Classification also makes it easier to implement discount strategies, bundle offers, and promotional pricing by grouping related products together. A targeted pricing strategy can drive more sales and improve profit margins.