mkt 5207 service marketing
DESCRIPTION
MKT 5207 Service Marketing. Afjal Hossain Assistant Professor Department of Marketing. Chapter 17 Pricing of Services. Pricing Quiz. Which dentist would you choose for a filling in your tooth?. Customer Often Lack of Knowledge of Service Prices. - PowerPoint PPT PresentationTRANSCRIPT
MKT 5207Service Marketing
Afjal HossainAssistant ProfessorDepartment of Marketing
Chapter 17Pricing of Services
Pricing Quiz
• Which dentist would you choose for a filling in your tooth?
Dentist Cost for Filling
Distance to Dentist
Wait Period for an
Appointment
Time in Waiting Room
Anesthesia
A $50 15 miles 3 Weeks 1.5 hour None
B $75 15 miles 1 Week .5 hour Novocain
C $125 3 miles 1 Week 1 hour Novocain
D $200 3 miles 1 Week No wait Nitrous Oxide
& Novocain
Customer Often Lack of Knowledge of Service Prices
• Customers often lack reference prices for service
• Service variability limits knowledge• Providers are unwilling to estimate prices• Individual customer needs vary• Collection of price information by customers is
difficult • Prices are not visible
The Role of Non-monetary Price
• Time costs• Search costs• Convenience costs• Psychological costs Do you trade time for money?
Price as an Indicator of Service Quality
Can price attract somecustomers?
Price as an Indicator of Service Quality
Infers Low Quality Service
Infers High Quality Service
Three Basic Marketing Price Structures and Challenges for Services
Demand-based
Cost-based
Co
mp
etit
ion
-b
ased
Challenges: 1. Costs difficult to trace. 2. Labor is more difficult to price than materials. 3. Costs may not equal the
value that customers perceive the services are worth.
Challenges: 1. Small firms may charge too little to be viable. 2. Heterogeneity of services limits comparability. 3. Prices may not reflect
customer value.
Challenges: 1. Monetary price must be adjusted to reflect the value of non-monetary costs. 2. Information on service costs is less available to customers; hence, price may not be a central factor.
Figure 17.1
A Customer-Focused Approach to The Pricing Process
Value is low price.
Value is thequality I get for the price I pay.
Value is everythingI want in a service.
Value is all thatI get for all that I give.
Four Customer Definitions of Value
Figure 17.2
Value is low price• Discounting• Odd pricing• Synchro-pricing• Penetration pricing
Pricing Strategies When the Customer Defines Value as Low Price
Figure 17.3
Value is everythingI want in a service• Prestige pricing• Skimming pricing
Pricing Strategies When the Customer Defines Value as Everything Wanted in a Service
Figure 17.4
Value is the quality I get for the price I pay•Value pricing•Market segmentation pricing
Pricing Strategies When the Customer Defines Value as Quality for the Price Paid
Figure 17.5
Value is all that I get for all that I give• Price framing• Price bundling• Complementary pricing• Results-based pricing
Pricing Strategies When the Customer Defines Value as All
that Is Received for All that Is Given
Figure 17.6
Value is low price•Discounting•Odd pricing•Synchro-pricing•Penetration pricing
Value is the quality I get for the price I pay•Value pricing•Market segmentation pricing
Value is everythingI want in a service•Prestige pricing•Skimming pricing
Value is all that I getfor all that I give•Price framing•Price bundling•Complementary pricing •Results-based pricing
Summary of Service Pricing Strategies forFour Customer Definitions of Value
Figure 17.7