the marketing mix price strategies. the importance of pricing pricing is one of the most vital...
TRANSCRIPT
The Marketing Mix
Price Strategies
The Importance of Pricing
Pricing is one of the most vital decisions made by management Price too high and you lose the sale Price too low and you can’t make money
Two fundamental ways to grow revenue raise your price increase the quantity you sell
Price is the easiest of all marketing variables to influence but among the most complex decisions to make price changes may be implemented immediately
Conceptual Orientation to Pricing
Initialpricing
discretionCorporate objectives andregulatory constraints
Competitive factorsFinal
pricingdiscretion
(Price ceiling)
Demand factors (Value to buyers)
(Price floor)
Direct variable costs
Nagle 1999
Nine Price-Quality Strategies
Setting the Price
Setting the Price
Pricing Procedure
Select pricing objective Determine demand Estimate costs Analyze competition Select pricing method Select final price
Survival Maximize current profits Maximize market share
Penetration strategy Market skimming
Skimming strategy Product quality leaders Partial cost recovery
Setting the Price
Pricing Procedure
Select pricing objective Determine demand Estimate costs Analyze competition Select pricing method Select final price
Understand factors that affect price sensitivity
Estimate demand curves
Understand price elasticity of demand Elasticity Inelasticty
Price Sensitivity
Situations That Increase Price Sensitivity Availability of product substitutes Higher total expenditure Noticeable differences Easy price comparison
Situations That Decrease Price Sensitivity Real or perceived necessities Lack of product substitutes Complementary products Product differentiation Perceived product benefits Situational influences
Price Elasticity of Demand
Setting the Price
Pricing Procedure
Select pricing objective Determine demand Estimate costs Analyze competition Select pricing method Select final price
Types of costs and levels of production must be considered
Accumulated production leads to cost reduction via the experience curve
Differentiated marketing offers create different cost levels
Setting the Price
Pricing Procedure
Select pricing objective Determine demand Estimate costs Analyze competition Select pricing method Select final price
Select method: Markup pricing Target-return pricing Perceived-value
pricing Value pricing
EDLP, Hi-Lo Going-rate pricing Auction-type pricing Group pricing
Setting the Price
Pricing Procedure
Select pricing objective Determine demand Estimate costs Analyze competition Select pricing method Select final price
Requires consideration of additional factors: Psychological pricing Gain-and-risk-sharing
pricing Influence of other marketing
mix variables Company pricing policies Impact of price on other
parties
Trade-in Allowances
Promotional Allowances
Adapting the Price
Price Discounts and Allowances
Quantity Discounts
Seasonal Discounts
Cash Discounts
Functional Discounts
Adapting the Price
Longer Payment Terms
Loss-Leader Pricing
Low Interest Financing
Warranties and Service Contracts
PsychologicalDiscounting
CashRebates
Special Event Pricing
Promotional Promotional Pricing Pricing TacticsTactics
Adapting the Price
Discriminatory Pricing Tactics
Customer Segment PricingCustomer Segment Pricing
Product-Form PricingProduct-Form Pricing
Location PricingLocation Pricing
Channel PricingChannel Pricing
Image PricingImage Pricing
Time PricingTime Pricing
Adapting the Price
Price discrimination works when: Market segments show different intensities of
demand Consumers in lower-price segments can not
resell to higher-price segments Competitors can not undersell the firm in higher-
price segments Cost of segmenting and policing the market
does not exceed extra revenue
Adapting the Price
Product-Mix Pricing Tactics
Optional-Feature PricingOptional-Feature Pricing
Captive-Product PricingCaptive-Product Pricing
Product-Bundle PricingProduct-Bundle Pricing
Product-Line PricingProduct-Line Pricing
By-Product PricingBy-Product Pricing
Two-Part PricingTwo-Part Pricing
Legal and Ethical Issues in Pricing
Price Discrimination Price Fixing Predatory Pricing Deceptive Pricing