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Pricing Strategies

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Price competition, value pricing

Non-price competition

Market entry pricing strategies, marketskimming and market penetration

Price discounts and allowances

Geographic pricing strategies Special pricing situations

Lesson Overview

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Price Determination Process

Select Pricing Objective

Select Method of Determining the Base Price

Cost-plusPricing

Price basedon Demandand Costs

Price Set inrelation toMarket alone

Design Appropriate Strategies

1.Price versus NonpriceCompetition

2.Skimming VsPenetration pricing

3.Discounts andAllowances

1.Geographicpricing

2.One price vs

Flexible price3.Leader Pricing

1.Everyday lowpricing

2.Resale priceMaintenance

3.Reactive vsProactive changes

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2

3

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Price versus Non-Price Competition

PriceValue Pricing

Low Price

Non-

Price

Stable Price

Emphasize other partsof marketing mix

Ajanta wall cloaks, Telephones, Big Bazar, China Bazar4

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Non-Price Competition

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Market-Entry Strategies

Market-SkimmingPricing

Set a relatively high price

Market-Penetration

Pricing

Low initial price

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Discounts and Allowances

TradeDiscounts

Reductions based on buyer

performing marketing functions

QuantityDiscounts

Reductions based on

size of purchase

CashDiscounts

Deductions based on

paying within a specified time

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Parts of a Cash Discount

3/10, NET 30

1/7, NET 30

Number of daysfrom date of

invoice inwhich bill

must be paidto receive

cash discount

Percentage tobe deductedif bill is paid

withinspecified time

Number of daysfrom date ofinvoice after

which billis overdue

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Other Discounts and Allowances

Coupons

E-coupons

Rebates

PromotionalAllowances

SeasonalDiscounts

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Geographic Pricing Strategies

Point-of-

ProductionFOB

FACTORY

UniformDelivery

Same Price

Cost of Freight

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Geographic Pricing Strategies

Freight-Absorption

Zone-Delivered

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Pricing Strategies

Flexible-price

One-price

Pricelining

Oddprice

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Pricing Strategies

Leaderpricing Loss Leader

High-Low

pricing

Everyday low price

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Pricing Strategies

ResalePrice

Maintenance

Suggested retail price

Reactivechanges

ProactiveChanges

Price Wars

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Key Terms and Concepts

Strategy

Price competition

Value pricing

Nonprice competition Market-skimming pricing

Market-penetration pricing

Predatory pricing

Quantity discount

Noncumulative discount

Cumulative discount

Trade (functional) discount

Cash discount Rebate

Price customization

Seasonal discount

Promotional allowance

Price discrimination

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Key Terms and Concepts

Robinson-Patman Act

FOB factory (mill) pricing

Uniform delivered pricing

Zone-delivered pricing

Freight-absorption pricing

One-rice strategy

Flexible-price (variable-price)strategy

Flat-rate pricing

Single-price strategy

Price lining

Odd pricing

Leader pricing

Leaders

Loss leader

Unfair-practices (unfair-sales) acts

High-low pricing

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