Developing Pricing

Strategies & Program

Ma. Rochelle C. Vasquez

PRICE
Importance of Price
CONSUMER PSYCHOLOGY AND PRICING

Reduce the Left Digit by One

CONSUMER PSYCHOLOGY AND PRICING
Display Prices in a Small Font Size
CONSUMER PSYCHOLOGY AND PRICING
▪ Remove the Comma
CONSUMER PSYCHOLOGY AND PRICING
▪ Bundling
SETTING THE PRICE

Selecting the Pricing Objective Determining Demand Estimating Costs

Analyzing Competitors’ Costs,

Selecting of Final Price Selecting a Pricing Method Prices, and Offers
SETTING THE PRICE

Selecting the Pricing Objective

The company first decides

where it wants to position its
market offering. The clearer a
firm’s objectives, the easier it is
to set price.
Selecting the Pricing Objective
Five major objectives:
Determining Demand

The price will lead to a

different level of
demand and have a
different impact on a
company’s marketing
objectives.
Estimating Costs
A company’s costs take two forms:
Analyzing Competitors’ Costs, Prices, and Offers
 Selecting a Pricing Method

Value Pricing

Going Rate Pricing Auction Type Pricing

 Selecting of Final Price

Impact of other Marketing Activities

Company Pricing Policies
ADAPTING THE PRICE
Geographical Pricing
Price Discount and Allowances
Promotional Pricing
Differential Pricing
INITIATING PRICE CUTS
Low-quality trap

Fragile-market-share trap

Shallow pocket trap

INITIATING PRICE INCREASES
Conclusion
 RESPONDING TO COMPETITORS’ PRICE
CHANGES

The company must consider the product’s stage in the

life cycle, its importance in the company’s portfolio, the
competitor’s intentions and resources, the market’s price
and quality sensitivity, the behavior of costs with
volume, and the company’s alternative opportunities.
STRATEGIES TO FIGHT LOW COST RIVALS

It’s easier to fight the enemy you know than one you
don’t
 Estimating Costs

The company wants to

charge a price that
covers its cost of
producing, distributing,
and selling the product,
including a fair return
for its effort and risk.
 Selecting of Final Price

Gain and Risk Sharing Pricing

Impact of Price on other parties