Skim Pricing – setting high prices relative to competitors. Your product/service needs to be differentiated to justify the price. But as the product moves through life cycles you need to either reduce the price or add value to the product/service. Sticking too much to skim pricing attracts new competitors.
Neutral Pricing – prices are close to the competition. Second-tier competitors use the strategy particularly when they want the basis of competition to be something different than price.
Penetration Pricing – used when price is the primary driver of purchase decision. It may work if you are certain that you can win the price war and stay profitable. However, the strategy creates more problems.
(Holden, Burton, 2008)
But businesses should not simply choose a strategy that they think will work for them. Pricing strategy should be a natural outcome of marketing strategy and the marketing strategy should be a way to execute business strategy.