Professional Documents
Culture Documents
Pricing Strategies
Pricing Strategies
Pricing Strategies
External
ExternalFactors
Factors
Internal
InternalFactors
Factors
Marketing
MarketingObjectives
Objectives
Marketing
MarketingMix
MixStrategy
Strategy
Costs
Costs
Organizational
Organizational
considerations
considerations
Pricing
Pricing
Decisions
Decisions
Nature
Natureofofthe
themarket
market
and
anddemand
demand
Competition
Competition
Other
Otherenvironmental
environmental
factors
factors(economy,
(economy,
resellers,
resellers,government)
government)
CHPT: 14-2
CHPT: 14-3
Many
ManyBuyers
Buyersand
andSellers
Sellers
Who
WhoHave
HaveLittle
Little
Effect
Effecton
onthe
thePrice
Price
Monopolistic
Monopolistic
Competition
Competition
Pure
Pure Monopoly
Monopoly
Single
SingleSeller
Seller
Oligopolistic
Oligopolistic
Competition
Competition
Many
FewSellers
SellersWho
WhoAre
Are
ManyBuyers
Buyersand
andSellers
Sellers Few
Who
Sensitiveto
toEach
EachOthers
Others
WhoTrade
TradeOver
Overaa Sensitive
Pricing/
Range
Pricing/Marketing
Marketing
Rangeof
ofPrices
Prices
Strategies
Strategies
Price Setting
Selecting the Pricing objective
Determining Demand
Estimating Costs
Analyzing Competitors Costs, Prices and offers
Selecting a Pricing Method
Selecting the final price
Adapting the price.
Pricing Strategies
Cost-Based Pricing
Pricing is
Simplified
Price
Competition Is
Minimized
Much Fairer to
Buyers & Sellers
Competition-Based Pricing
Setting Prices
Going-Rate
Company Sets Prices Based on What
Competitors Are Charging.
Sealed-Bid
Company Sets Prices Based on
What They Think Competitors
Will Charge.
Value Pricing
Value Pricing
Price set in accordance
with customer
perceptions about the
value of the
product/service
Offering value at a low
price.
Contd..
Shift from cost based to value based pricing
What
Example
Tata Motors launched a compact sedan called Tata Indigo
Loss Leader
Loss Leader
Goods/services deliberately sold below cost to encourage
sales elsewhere
Contd.
Loss leader can backfire. In Amazon's case, the initial
Applications
Unwanted Merchandise/ Slow moving items
Attracting Customers
Brand Building
Tracking Advertising
Examples
When Apple Inc reduces the prices on its latest products,
Contd.
Advertising a loss-leader product at a price that will
Psychological Pricing
Psychological Pricing
Used to play on consumer perceptions
Classic example - Rs9.99 instead of Rs10.
Links with value pricing high value goods priced
Contd..
Psychological pricing is a pricing tactic that is
designed to appeal to customers who use
emotional rather than rational responses to pricing
messages
Contd
Sometimes prices are set at what seem to be unusual price
points
For example, why are DVDs priced at 12.99 or 14.99?
on price too high and they lose market share, too low and
the price leader would match price and force smaller rival
out of market
for aa New
New Product
Product to
to
for
Skim Maximum
Maximum
Skim
Revenues from
from the
the
Revenues
Target Market.
Market.
Target
Results
Results in
in Fewer,
Fewer, But
But
More Profitable
Profitable Sales.
Sales.
More
MarketPenetration
Penetration
Market
Setting
Settingaalow
lowprice
pricefor
foraa
newproduct
productin
inorder
orderto
to
new
Penetratethe
themarket
market
Penetrate
quicklyand
anddeeply.
deeply.
quickly
Attract
Attractaalarge
largenumber
numberof
of
buyersand
andwin
winaalarger
larger
buyers
marketShare.
Share.
market
products,
Customer evaluations of
different features, and
competitors prices.
Contd.
Companies with more than one product within the same
The price on each product in the line is set with that price's
profits
Examples
In Automobiles , price range in a given line from base
Contd
Kotler defines captive-product pricing as, Setting a price
Contd..
Could you give some examples???
Contd.
Contd.
The first benefit of captive pricing is the ability to attract a
customer loyalty
By keeping customers hooked to your products and brand,
Contd.
A portion of the audience may feel duped by the lure of a
low-priced product only to pay perpetually to use it
Contd
Contd..
For example, a camera retailer may offer a discounted price
when customers purchase both a digital camera and a howto photography DVD that is lower than if both items were
purchased separately.
In this example the retailer may promote this as: Buy both
Contd.
Marketer is presenting a price adjustment without the
Optional Pricing
Companies will attempt to increase the amount customer spend
once they start to buy. Optional 'extras' increase the overall price
of the product or service.
Airlines will charge for optional extras such as guaranteeing a
window seat or reserving a row of seats next to each other.
Mobile handsets with Service connection.