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    Pricing Decisions

    Uploaded by

    Christopher Jake
    The document discusses pricing strategies and policies. It covers how companies determine pricing objectives, estimate costs and demand, analyze competitors, and select a final price. It also discusses adapting prices based on factors like location, promotions, customer segments. Common pricing mistakes like failing to adjust prices or consider other marketing elements are outlined. The document provides steps in setting prices and strategies for initiating or responding to price changes.

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    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd

    Pricing Decisions

    Uploaded by

    Christopher Jake
    2 views27 pages
    The document discusses pricing strategies and policies. It covers how companies determine pricing objectives, estimate costs and demand, analyze competitors, and select a final price. It also discusses adapting prices based on factors like location, promotions, customer segments. Common pricing mistakes like failing to adjust prices or consider other marketing elements are outlined. The document provides steps in setting prices and strategies for initiating or responding to price changes.

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    © © All Rights Reserved

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    The document discusses pricing strategies and policies. It covers how companies determine pricing objectives, estimate costs and demand, analyze competitors, and select a final price. It also discusses adapting prices based on factors like location, promotions, customer segments. Common pricing mistakes like failing to adjust prices or consider other marketing elements are outlined. The document provides steps in setting prices and strategies for initiating or responding to price changes.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    2 views27 pages

    Pricing Decisions

    Uploaded by

    Christopher Jake
    The document discusses pricing strategies and policies. It covers how companies determine pricing objectives, estimate costs and demand, analyze competitors, and select a final price. It also discusses adapting prices based on factors like location, promotions, customer segments. Common pricing mistakes like failing to adjust prices or consider other marketing elements are outlined. The document provides steps in setting prices and strategies for initiating or responding to price changes.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 27

    PRICE

    A changing pricing
    environment
     Get instant price comparisons from
    thousands of vendors
     Name the price and have it met
     Get products free
     Monitor customer behavior and tailor offers
    to individuals
     Give certain customers access to special
    price
     Negotiate prices in online auctions &
    exchanges
    How companies price

     Consumer Psychology and pricing


     Reference prices
     Price-Quality Inferences
    Common Pricing Mistakes
     Determine costs and take traditional industry
    margins
     Failure to revise price to capitalize on market
    changes
     Setting price independently of the rest of the
    marketing mix
     Failure to vary price by product item, market
    segment, distribution channels, and purchase
    occasion
    PRICING POLICY

    1) Selecting the pricing objective


    2) Determining demand
    3) Estimating costs
    4) Analyzing competitors costs, prices &
    offers
    5) Selecting a pricing method
    6) Selecting the final price
    Price Cues

     “Left to right” pricing ($299 vs. $300)


     Odd number discount perceptions
     Even number value perceptions
     Ending prices with 0 or 5
     “Sale” written next to price
    Steps in Setting Price
    Select the price objective

    Determine demand

    Estimate costs

    Analyze competitor price mix

    Select pricing method

    Select final price


    PRICING POLICY

    1. Selecting the pricing objective


    • Survival, Current profit, Market Share,
    Product -Quality leadership

    Market skimming pricing strategy


    Market penetration pricing strategy
    PRICING POLICY
    1. Determining demand
    • Price sensitivity
    • Estimating demand curve
    • Price elasticity of demand
    Figure 14.2 Inelastic
    and Elastic Demand
    Step 3: Estimating Costs
    Types of Costs
    Accumulated
    Production
    Activity-Based
    Cost Accounting
    Target Costing
    Cost Terms and
    Production
     Fixed costs
     Variable costs
     Total costs
     Average cost
     Cost at different
    levels of
    production
    Figure 14.4 Cost per Unit as a
    Function of Accumulated
    Production
    Tata motors developed
    ‘Nano’its small car with a
    target price
    PRICING POLICY (cont.)
    5. Selecting a pricing method
    * Mark up pricing
    * Target return pricing
    * Perceived value pricing
    * Value pricing
    * Going rate pricing
    * Sealed bid pricing
    Cont. …
    PRICING POLICY (cont.)
    6. Selecting the final price
    * Psychological pricing
    * Influence of mktg. Mix elements
    * Company pricing policies
    * Impact of price on other parties
    ADAPTING THE PRICE

     Geographical
     Price discount and allowance
     Promotional
     Discriminatory
     Product mix
    Geographical

     Barter
     Compensation
     Buyback
     offset
    Price Discount &
    Allowance
     Cash discount
     Quantity discount
     Functional discount
     Seasonal discount
     Allowance
    Promotional Pricing

     Loss-leader
     Special event
     Cash rebates
     Low-interest financing
     Longer payment terms
     Warranties and service contracts
     Psychological discounting
    DISCRIMINATORY
    PRICING
     Customer segment pricing
     Product form pricing
     Image pricing
     Location pricing
     Time pricing
    PRODUCT MIX PRICING

    – Product line pricing


    – Optional feature pricing
    – Captive product pricing
    – Two part pricing
    – By product pricing
    – Product bundling pricing
    Initiating & responding to
    Price changes
     Initiating
     Reaction
     Responding
    INITIATING PRICE
    CHANGES
     INTIATING PRICE CUTS
    – Common Errors
    Low quality

    Fragile market share

    Shallow pocket

    cont…
    INITIATING PRICE
    CHANGES

     INITIATING PRICE INCREASES


    Ways-
    – Delayed quotation pricing
    – Escalator clauses
    – Unbundling
    – Reduction of discounts
    REACTIONS TO PRICE
    CHANGES

     CUSTOMERS’ REACTIONS

     COMPETITORS’ REACTIONS
    Responding To Competitors’ Price
    Changes
     Maintain price
     Maintain price & add value
     Reduce price
     Increase price & improve quality
     Launch a low-price fighter line

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