MODULE 1
Pricing Strategy
 Strategic Pricing- is the
tactics that company use to
increase sales and
maximize profits by selling
their good and services for
appropriate prices.
Goals of strategic Pricing
 Is to price more
profitability by capturing
more value, not necessarily
by making more sales
 Understand the value of the
product to satisfy customers
and to communicate that
value to others
 Prices should be lowered
only when they are no
longer justified by the value
offered in comparison to
the value offered by the
competition
 To find the combination of
margin and market share
that maximizes profitability
over the long term
ta
3 Principle of Pricing
Strategies-
 Value-Based - Means that
differences in pricing
across customers and
changes over time reflect
differences or changes in
the value to customers.
 Proactive - Means that
companies anticipate
disruptive events.
 Profit – Driven – Means
that the company evaluate
its success at price
management by what it
earns relative to alternative
investments rather than by
the revenue it generates
relatives to its competitors.
Strategic Pyramid
Value Creation – When
customers fail to get the value for
money, they don’t repeat the
purchase and discourage other
from making the same mistakes
Price and Value
Communication – A successful
pricing strategy must justify the
prices charged in terms of the
value of the benefits provided
Pricing Policy – Refers to the
rules or habits, either explicit or
cultural that determine how a
company varies its prices when
faced with factors other than
value and cost to serve that
threaten its ability to achieve its
project.
Price Level – Price setting
should be an interactive and
cross functional process led by
marketing that includes several
actions.
MODULE 2 – Economic Value
Role of Value in Pricing –
Economic Value – Is a
calculation of the profits an asset
has either produced or may
produce in the future. it is a
measure of the benefit a product
or service provides an economic
agent.
Differentiation Value – Refers
to the benefits that your product
or service delivers to customers
over and above those provided
by the competitive reference
product.
2 Forms of Differentiation
Value
 Monetary Value – total
cost savings and income
enhancements
- A customer accrues as a
result of purchasing a
product
- Most important element
of business to business
purchases s
 Psychological Value
- Many way that a product
creates, innate satisfaction
for the customers.
- It deals with prestige,
beauty, satisfaction,
pleasure
Total Economic Value
- Value derived by people
from natural resources or
man-made resources
compared of not having
it.
Reference Value – Price of the
customer’s best alternative
Metrics – Are the basis for
tracking the value customers
received and show they pay for it
Fences – Are the policies, rules
and programs and structures that
customers must follow to qualify
for price discounts or rewards
3 Contribution of value
- Provides insight into
how willingness to pay
differs across segments
- Understanding value
develop effective
communication
campaigns to increase
customer willingness to
pay
- The value can and
should be one of the key
inputs to the price setting
decision
Module 3 brands requiring the
customer to invest
Steps in Developing Value
substantial time and effort
Message
to evaluate the products
 Adapting the message for before purchase
product characteristics - Marketers of experience
- Determining which goods will focus on
customer perceptions to broader assurance of
influence value intended to reduce
 Cost research – is the the perceived risk of
financial and non financial purchase and to increase
cost. Relative to the awareness of the
expenditures in the potential benefits.
category , that a customer
Type of benefit sought –
must incur to determine
influence communication
differences in feature and
strategy.
benefits across alternative.
 Search Cost – is the time  Monetary Benefits
you spend taking multiple - Profit
trips to different stores to - Cost saving
find the particular good you - Productivity
want  Psychological Benefits
 Search Goods - Comfort
- Customers determine - Appearance
product differences - Pleasure
before purchase. - Status
- Allow buyers to - Personal fulfillment
information and chooser
among them prior to
purchase
 Experience Good – More
difficult to evaluate across
  Adapting the message to - Free taste, experimental
purchase context shopping, test drive.
- Value Based  Fulfillment
communication must be - Involves the selections
adjusted for the of purchase channel and
customers purchase then actual purchase.
context - The goal is to justify the
Buying Process stages price by using value to
create a favorable
 Origination – it is value as framing for the price.
a lever to encourage  Framing Price
customer to consider - Focus on what the
purchase within the customer gains by
category purchasing product
Cont. Stages of buying Process instead of what they lose
and an have a powerful
 Information Gathering psychological influence
- Sales people have power of the purchase decision.
to communicate value
and influence the
purchase decision.
- to increase the salience
of the value drivers upon
which your product has
an advantage.
 Selection
- To create awareness of
your brand and its
superiority in terms of
the most salient value
drivers
 value being
Multiple participants in communication.
buying process 4 aspect of price perception
- The addition of and implications
individuals to the buying
process complicates the  Reference Prices
jobs of value - What a buyer consider a
communications because reasonable and fair price
it forces marketers to for a product
adapt and deliver - Comparison of
multiple messages at experience/high brand or
different point in the house brand
buying process. - Coupons, rebates,
- Must ensure that it is special package
delivered to the right Cont.
person at the right time
in the buying process  Perceived Fairness
- Lose coordination - a seller justifying a
between marketing and higher price with a good
sales to have a motives makes the price
successful value more acceptable than
communication those a “bad” motive
 Price Communication  Gain loss Framing
- Hard data that are - Refers to phrasing a
relatively easy to statemen that describe a
compare and choice or outcome in
communicate terms of its positive or
- The price a customer is negative features
willing to pay for a
product or service
directly corelates with
their perception of the