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Kultur Dokumente
PRINCIPLES OF
MARKETING
Pricing Products:
Understanding and Capturing Customer Value
Pricing Products:
Pricing Strategies
Learning Objectives
10-2
What Is Price?
10-4
Factors to Consider When Setting Prices
10-6
Factors to Consider When Setting Prices
Value-based pricing
• Good-value pricing
• Offers the right combination of quality and
good service to fair price
• Value-added pricing
• Existing brands are being redesigned to
offer more quality for a given price or the
same quality for less price
10-7
Factors to Consider When Setting Prices
10-9
Factors to Consider When Setting Prices
10-10
Factors to Consider When Setting Prices
10-11
Factors to Consider When Setting Prices
Types of costs
• Fixed costs
• Rent, salaries etc
• Variable costs
• Raw materials, packaging etc
• Total costs
• TC = TFC + TVC
10-12
Factors to Consider When Setting Prices
10-18
Factors to Consider When Setting Prices
10-21
Factors to Consider When Setting Prices
Other Internal and External Considerations
Affecting Price Decisions
Internal factors
• Marketing strategies
• Organization
• Who should set the price and who can influence
• Objectives
• Survival, profit maximization, customer retention etc
• Marketing mix
• 4 P’s (Product, Place, Promotion and Price)
External factors
• Market demand
• Competitor’s strategies and prices
10-22
Factors to Consider When Setting Prices
Types of markets
• Pure competition
• Monopolistic competition
• Oligopolistic competition
• Pure monopoly
10-28
Factors to Consider When Setting Prices
10-29
Factors to Consider When Setting Prices
10-31
Factors to Consider When Setting Prices
10-32
Factors to Consider When Setting Prices
10-33
Factors to Consider When Setting Prices
Factors to consider
• Comparison of offering in terms of customer value
• Strength of competitors
• Competition pricing strategies
• Customer price sensitivity
10-34
Factors to Consider When Setting Prices
10-35
TWO BROAD NEW-PRODUCT PRICING
STRATEGIES
Psychological pricing
Promotional pricing
Geographical pricing
International pricing
Price Adjustment Strategies
Pricing Strategies
• Discounts
• Cash discount for paying promptly
• Quantity discount for buying in large volume
• Functional (trade) discount for selling, storing,
distribution, and record keeping
• Allowances
• Trade in allowance for turning in an old item
when buying a new one
• Promotional allowance to reward dealers for
participating in advertising or sales support
programs
11-14
Price Adjustment Strategies
Pricing Strategies
11-13
Price Adjustment Strategies
Pricing Strategies
11-20
Price Adjustment Strategies
Pricing Strategies
• Loss leaders
• Special event pricing
• Cash rebates
• Low interest financing
• Longer warrantees
• Free maintenance
11-21
Price Adjustment Strategies
Pricing Strategies
11-23
Price Adjustment Strategies
Pricing Strategies
11-24
Price Adjustment Strategies
Pricing Strategies
• Dynamic pricing
• when prices are adjusted continually to meet the
characteristics and needs of the individual customer
and situations
• International pricing
• prices are set in a specific country based on country-
specific factors
• Economic conditions
• Competitive conditions
• Laws and regulations
• Infrastructure
• Company marketing objective
11-28
Price Changes
11-32
Price Changes
• Price cuts
• New models will be available
• Models are not selling well
• Quality issues
• Price increases
• Product is “hot”
• Company greed
11-33
Price Changes
Questions
• Why did the competitor change the price?
• Is the price cut permanent or temporary?
• What is the effect on market share and
profits?
• Will competitors respond?
11-34
Price Changes
Solutions
• Reduce price to match competition
• Maintain price but raise the perceived value
through communications
• Improve quality and increase price
• Launch a lower-price “fighting brand”
11-35
Public Policy and Pricing
11-36
Public Policy and Pricing
11-37
Public Policy and Pricing
11-39