Chapter 6

Competitive Pricing
 Overview

• Competitive pricing, also known as competition-

based pricing, is a strategy where a business sets
its prices based on the prices of similar products
or services offered by competitors. This approach
is particularly prevalent in markets with high
levels of competition and where products are
relatively homogeneous.
 Learning Objectives

1.Define competitive pricing and its

importance in the business landscape.
2.Identify the key elements and principles
underlying competitive pricing strategies.
Competitive Pricing
Competitive pricing is a marketing strategy
whereby businesses set prices based on their
competitors’ prices. Also known as competitor-based
pricing, this strategy can be used in online
and offline markets and is often used to attract more
customers and increase market share.

However, for competitive pricing to be effective,

businesses need to understand their competitors’
pricing strategies and how consumers perceive value.
Competitive Pricing
Competitive pricing or competition-based
pricing is a pricing strategy where you take into
account the prices of your competitors when setting
your products’ prices.

This pricing method is usually used for

homogenous products in highly competitive markets
and can be also referred to as market-oriented pricing.
 Competitive Pricing Basics
For companies just getting started setting prices based on their
competition, here are a few steps to take to determine if this type of pricing
strategy is best for the business:

1. Research the competition to understand what other businesses in the

industry are charging for similar products or services.

2. Consider the costs of materials, labor, overhead, and shipping when

setting prices.

3. Know the target market and what customers are willing to pay for
the product or service. Price-conscious consumers expect
competitive prices.

4. Monitor market and industry trends, as well as changes in the

overall economy that could impact customer demand or costs.
When it comes to competitor-based
pricing, you have three options:

1. Go above the price of your competitors

2. Following competitors’ prices

3. Go below the price of your competitors

 Chapter 7
Price Lining
Learning Objectives

• Define price lining and its significance in

pricing strategies.
• Identify the core principles and
components of price lining.
Price Lining
Price lining also goes by the name of product line
pricing. It’s a process of marketing strategy where
businesses and retailers set different prices of the same
products but have different features, degrees,
characteristics, and attributes.

In other words, it’s the process of categorizing the

same product with different prices, as the attributes and
features of the same product changes, their prices also
change. It is because the customers would perceive the
higher value of the product if the price is higher.
Examples of price Lining

• Smartphones
• Automobiles
• Internet Mobile Data Services
• Hospitality Industry
 Chapter 8
Bundling Pricing
Strategy
 What is bundle pricing?
Bundle pricing is a business strategy where
companies group several products together into a
bundle and sell them at a single price, rather than
attribute individual prices to each item. This means
that a bundle is now an individual product.

Bundle pricing is a pricing strategy where

companies package separate products together
and offer them at a single — typically reduced —
price.
 Types of Bundling Pricing

1. Pure Bundle- Pure bundling gives customers

the option to purchase the bundle as-is or not at
all. This is the easiest way to bundle as the
products / services in the bundle are under your
control.

2. Mix Bundle- Like pure bundling, mixed

bundling does not give customers the ability to
dictate what products / services belong in the
bundle.
Any Questions ?
References

Nagle, T., & Holden, R. (2002). "The Strategy and Tactics of Pricing: A Guide to
Growing More Profitably." Prentice Hall.

Kotler, P., & Armstrong, G. (2018). "Principles of Marketing." Pearson

Education.
 THANK YOU

Christian Jay R. Vitug