PRICING

• RENT
• TUITION

PRICE IS THE SUM OF ALL THE VALUES THAT • FARE

CUSTOMERS GIVE UP TO GAIN THE • RATE
BENEFITS OF HAVING OR USING A
• TOLL
PRODUCTS OR SERVICES.
• PREMIUM
PRICE IS THE MARKETING-MIX ELEMENT • HONORARIUM,
THAT PRODUCES REVENUE; THE OTHERS
PRODUCE COST. PRICE IS ALSO ONE OF • SALAR
THE MOST FLEXIBLE ELEMENTS. • DUES
• BRIBES
• TAX
AUTO-MARKET EIGHT PRICE POINTS

SEGMENT EXAMPLE (AUTOMOBILES)

• ULTIMATE • Rolls-Royce
• GOLD STANDARD • Mercedes Benz
• LUXURY
• Audi
• SPECIAL NEEDS
• Volvo
• MIDDLE
• Buick
• EASE/CONVENIENCE
• ME TOO/BUT CHEAPER
• Ford Escort
• PRICE ALONE • Hyundai
• Kia
NINE PRICE QUALITY STRATEGIES

• Diagonal Strategies is 1, 5 and 9.

• Strategies 2, 6 and 9 are ways to
attack the diagonal position
• Position strategies 4, 7 and 8 is over
pricing the product in relation to its
quality.
 Selecting Selecting the Pricing Objective

Determining Determining the Demand

STEPS IN Estimating Estimating the Costs

SETTING THE
PRICE Analyzing Analyzing Competitors Costs, Prices and Offers

Selecting Selecting a Pricing Method

Selecting Selecting the Final Price

SELECTING THE PRICING OBJECTIVES

5 MAJOR OBJECTIVES
THROUGH PRICING

1. Survival
2. Maximum current profit
3. Maximum market share
4. Maximum market skimming
5. Product quality leadership
DETERMINING THE DEMAND

Factors that affect price sensitivity

• Unique-value effect
• Substitute-awareness effect
• Difficult-comparison effect
• Total-expenditure effect
• End-benefit effect
• Shared-cost effect
• Sunk-investment effect
• Price-quality effect
• Inventory effect
ESTIMATING COSTS

• TYPES OF COSTS
• FIXED
• VARIABLE

• ACCUMULATED PRODUCTION
• ACTIVITY BASED ACCOUNTING
• TARGET COSTING
 STEP 4: ANALYZE COMPETITOR PRICE MIX

• Identify Nearest price competitors

• Take competitor’s features and prices into
account
• Make decision to charge more, the same or
less than competitors
• Monitor competitor’s reaction to your
pricing strategy
Step 5: Selecting a Pricing Method
• Markup pricing
• Target-return pricing
• Perceived-value pricing
• Value pricing
• Going-rate pricing
• Auction-type pricing
 Step 6: Selecting the Final Price

• Impact of other marketing activities

• Company pricing policies
• Gain-and-risk sharing pricing
• Impact of price on other parties
Price-Adaptation Strategies
Geographical Pricing

Discounts/Allowances

Promotional Pricing

Differentiated Pricing
 Price-Adaptation Strategies

Countertrade Discounts/ Allowances

• Barter • Cash discount

• Compensation deal • Quantity discount
• Buyback arrangement • Functional discount
• Offset • Seasonal discount
• Allowance
Promotional Pricing Tactics
• Loss-leader pricing
• Special-event pricing
• Cash rebates
• Low-interest financing
• Longer payment terms
• Warranties and service contracts
• Psychological discounting
Differentiated Pricing
• Customer-segment pricing
• Product-form pricing
• Image pricing
• Channel pricing
• Location pricing
• Time pricing
• Yield pricing
 Increasing Prices

• Delayed quotation pricing

• Escalator clauses
• Unbundling
• Reduction of discounts
Brand Leader Responses to Competitive
Price Cuts
• Maintain price
• Maintain price and add value
• Reduce price
• Increase price and improve quality
• Launch a low-price fighter line
THANK YOU!!!