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7/17/2019 s 9 Pricing 2014-5
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9
Copyright © 2011 Pearson Education
Pricing
Veronica Mak
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Is Price = Money?
Price is the amount of money chargedfor a product or service, or the sum of
the vaues that customers e!change forthe "enefits of having or using theproduct or service#
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$ Pricing %trategies
2. Competition-
based pricing
3. Cost-Based
pricing
1. Customer value-
based pricing
Pricing Considerations
&hree Pricing %trategies
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'aue()ased versus Cost()ased
Pricing
Competition-based pricing
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*vera Mar+eting %trategy,*"ectives, and Mi!
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Customer Value-Based
Pricing
( offering ust the right com"ination of
-uaity and good service at a fair price
( attaching vaue(added features and
services to differentiate a company.s
offers and charging higher prices#
PnS: Everyday low price,
high-low pricing Chinese character
chocolates
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/ood('aue Pricing
*ffering the right
com"ination of
-uaity and good
service at a fair
price
Snap Fitness
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'aue(dded Pricing
ttaching vaue(
added features
and services to
differentiate a
company.s offers
hie charging
higher pricesRather than cutting services tomaintain lower amission prices!premium theaters such as "#$%s$inema Suites are aingamenities an charging more&
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Problems of
Customer Value-Based Pricing
3hat are the
chaenges to a
mar+eter houses vaue(
"ased pricing?
Many vaues are
su"ective and
vary fromcustomer to
customer#
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Cost-Based Pricing
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&ypes of Cost()ased Pricing
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Breaeven Pricing
3hat is thePro"em?
it fais toconsidercustomer vaueand the
reationship"eteen priceand demand#
'aria"e cost
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Competition()ased Pricing
%etting prices
"ased on
competitors.
strategies, prices,
costs, and mar+et
offeringsFast-growing clothing
)outi*ue +ot #ama isn%tli,el to win a price waragainst giants li,e #ac%s or.ohl%s& /nstea! it relies onpersonal service! a mom- an,i-0rienl atmosphere! an
its ,nowlegea)le sta1 toturn harrie moms into lo al
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*ther Considerations ffectingPricing 4ecisions
Interna factors5
*vera mar+eting strategy, o"ectives, and
the mar+eting mi!
*rgani6ationa considerations
E!terna factors5
7ature of the mar+et and demand
*ther environmenta factors
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*vera Mar+eting %trategy,*"ectives, and Mi!
Company must decide on its overa
mar+eting strategy for the product and the
roe that price i pay in accompishing
o"ectives
Pricing decisions need to "e coordinated
ith pac+aging, promotion, and
distri"ution decisions
Positioning may "e "ased on price
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Pricing in 4ifferent &ypes of
Mar+ets
&rading in a uniform
commodity such asheat, copper, or
financia securities#
Many "uyers and
seers trading over
ranges of prices# 8P to
differentiate, e#g# car
9e seers, e#g#petroeum suppiers
firm.s fe!i"iity insetting price varies
depending on the
nature of the mar+et
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nay6ing the Price(4emand
:eationship ( 4emand Curve
Price elasticity !
the change in
demand withthe change in
price:
; Elastic ; "nelastic
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&he Price(4emand Curve
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hen $on"gra raise prices on its an*uet 0roen inners! sales 0ellsharpl& he ,e component & & &is ou%ve got to )e at '! sas $: ;arRo,in! picture a)ove& verthing else pales in comparison to that&
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&he Economy5 Impact on Pricing
Economic factors have a strong impact on
pricing strategies
&he recent recession has ed to many
consumers "ecoming more vaue(
conscious
3hie some firms have cut price, others have
shifted to featuring more afforda"e items
%ome firms have hed price, "ut repositioned
"rands to enhance their vaue
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Mar+eting at 3or+
3hen the economy
dipped, rather than
cutting everyday
prices, 3hoe9oods set out to
convince shoppers
that it as, in fact,an afforda"e pace
to shop
9 - 2(
hole Foos assigne
wor,ers to serve as valuetour guies! li,e the onea)ove! to escort shoppersaroun stores pointing outvalue items
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7e(Product Pricing %trategies
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3hen to <se Mar+et(%+imming
Pricing
Product.s -uaity andimage supportsits higher price
Costs of o voumecannot "e so high thatthey cance out the"enefit of higher price
Competitors shoud not"e a"e to enter mar+eteasiy and undercut price
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3hen to <se Mar+et(Penetration
Pricing
Mar+et is highy pricesensitive so a o priceproduces more groth
Production and
distri"ution costsdecrease as saesvoume increases
o price can hep +eepout the competition, andthe penetration pricercan maintain its o(price position
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Product #i$ Pricing
%escafe
Softwares
&a'or (blade
)oodlandPar
)ellcome
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Price *d+ustments
:eduction from the ist price for "uyer actions such as trade(ins or promotiona and saes support
1> Customer segment pricing, e#g# museums 2> product(formpricing, e#g# evian $> ocation("ased pricing, e#g#universities8> time("ased, e#g# cinemas
( @igh price, "etter -uaity reference prices
( %easona sae
( 9*), Aone, uniform(deivery, etc#
*r B:ea(time pricing "ased on consumer.s "ehavior,e#g# ma6on, as+a irine
Mc4onad ham"urger in different countries#
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Price cutting
dverse effects5
Create Bdea(prone customers
Erode a "rand.s vaue ead to price ars
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@o to react to price cutting?
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4eveoping an Integrated Mar+eting Mi!
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7on(test Part
eographical Pricing
"nternational Pricing ; &he price that a company shoud charge in a specific country depends
on many factors, incuding economic conditions, competitive situations,as and reguations, and deveopment of the hoesaing and retaiing
system#
; Costs pay an important roe in setting internationa prices#
; PB."C P/."C0 *%1 P&"C"%
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Identify the three maor pricing strategiesand discuss the importance ofunderstanding customer(vaue
perceptions, company costs, andcompetitor strategies hen setting prices#
Identify and define the other important
internal and e$ternal factors affecting afirm.s pricing decisions#
4escri"e the maor strategies for pricingimitative and new products#
oa%s Summar
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E!pain ho companies find a set ofprices that ma$imi'e the profits from thetota product mi!#
4iscuss ho companies adust theirprices to ta+e into account different typesof customers and situations#
4iscuss the +ey issues reated to initiatingand responding to price changes
oa%s Summar