Pricing strategy and management

Chapter 8 Pricing Strategy and Management

Conceptual Orientation to Pricing ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Price as an Indicator of Value ,[object Object],[object Object],Value = Perceived benefits Price

Price Elasticity of Demand ,[object Object],[object Object],E = Percentage change in quantity demanded Percentage change in price where E is the coefficient of elasticity

Factors that Influence Price Elasticity of Demand ,[object Object],[object Object],[object Object]

Product-Line Pricing ,[object Object],[object Object],[object Object],[object Object]

Pricing Strategies ,[object Object],[object Object]

Full-Cost Pricing ,[object Object],[object Object],[object Object]

Variable-Cost Pricing ,[object Object],[object Object],[object Object],[object Object],Assumption is that variable-cost pricing will stimulate demand and increase revenues.

New-Offering Pricing Strategies ,[object Object],[object Object],[object Object]

Use Skimming Pricing Strategy when: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Use Penetration Pricing Strategy when: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Intermediate Pricing Strategy ,[object Object],[object Object],[object Object]

Pricing and Competitive Interaction ,[object Object],[object Object],[object Object],[object Object],[object Object]

Industry Characteristics and Risk of Price Wars Characteristics High Risk Low Risk Product/Service Type undifferentiated differentiated Market Growth Rate stable/decreasing increasing Price Visibility to Competitors high low Consumer Price Sensitivity high low Overall Industry Cost Trend declining stable Industry Capacity Utilization low high Number of Competitors many few

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