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kotler_pom16e_inppt_10 &11 Pricing.pptx

  1. Principles of Marketing Chapter 10: Pricing Understanding and Capturing Customer Value Chapter 11: Pricing Strategies Additional Considerations
  2. What Is a Price? Price is the amount of money charged for a product or service, or the sum of all the values that customers exchange for the benefits of having or using the product or service.
  3. Major Pricing Strategies Considerations in Setting Price
  4. Major Pricing Strategies Cost-Based Pricing Cost-based pricing sets prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.
  5. Major Pricing Strategies Cost-Based Pricing Fixed costs are the costs that do not vary with production or sales level. • Rent • Heat • Interest • Executive salaries
  6. Major Pricing Strategies Cost-Based Pricing Variable costs vary directly with the level of production. • Raw materials • Packaging
  7. Major Pricing Strategies Cost-Based Pricing Total costs are the sum of the fixed and variable costs for any given level of production.
  8. Major Pricing Strategies Customer Value-Based Pricing Value-based pricing uses the buyers’ perceptions of value rather than the seller’s cost. • Value-based pricing is customer driven. • Cost-based pricing is product driven. • Price is set to match perceived value.
  9. Major Pricing Strategies Customer Value-Based Pricing Value-Based Pricing vs. Cost-Based Pricing
  10. Major Pricing Strategies Customer Value-Based Pricing Good-value pricing is offering just the right combination of quality and good service at a fair price.
  11. Major Pricing Strategies Customer Value-Based Pricing Everyday low pricing (EDLP) involves charging a constant everyday low price with few or no temporary price discounts.
  12. Major Pricing Strategies Customer Value-Based Pricing High-low pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.
  13. Major Pricing Strategies Customer Value-Based Pricing Value-added pricing attaches value-added features and services to differentiate the companies offers and thus their higher prices.
  14. Major Pricing Strategies Competition-based pricing is setting prices based on competitors’ strategies, costs, prices, and market offerings. Competition-based pricing
  15. Other Internal and External Considerations Affecting Price Decisions The Market and Demand Pricing in Different Types of Markets Pure competition Monopolistic competition Oligopolistic competition Pure monopoly
  16. Pricing Strategies Additional Considerations
  17. New Product Pricing Strategies Market-skimming Pricing Market-skimming pricing strategy sets high initial prices to “skim” revenue layers from the market. • Product quality and image must support the price. • Buyers must want the product at the price. • Competitors should not be able to enter the market easily
  18. New Product Pricing Strategies Market-penetration Pricing Market-penetration pricing involves setting a low price for a new product in order to attract a large number of buyers and a large market share
  19. Product Mix Pricing Strategies Product line pricing Optional product pricing Captive product pricing By-product pricing Product bundle pricing
  20. Product Mix Pricing Strategies Product Line and Optional Product Pricing Product line pricing takes into account the cost differences between products in the line, customer evaluations of their features, and competitors’ prices. Optional product pricing takes into account optional or accessory products along with the main product.
  21. Product Mix Pricing Strategies Captive Product Pricing Captive product pricing sets prices of products that must be used along with the main product.
  22. Product Mix Pricing Strategies By-product and Product Bundle Pricing By-product pricing sets a price for by-products in order to make the main product’s price more competitive. Product bundle pricing combines several products at a reduced price.
  23. Price Adjustment Strategies Discount and allowance pricing Segmented pricing Psychological pricing Promotional pricing Geographic pricing Dynamic pricing International pricing
  24. Price Adjustment Strategies Discount and Allowance Pricing Discount and allowance pricing reduces prices to reward customer responses such as making volume purchases, paying early, or promoting the product.
  25. Price Adjustment Strategies Segmented Pricing Segmented pricing involves selling a product or service at two or more prices, where the difference in prices is not based on differences in costs. • Customer-segment pricing • Product-form pricing • Location-based pricing • Time-based pricing
  26. Price Adjustment Strategies Psychological Pricing Psychological pricing considers the psychology of prices and not simply the economics; the price is used to say something about the product. Reference prices are prices that buyers carry in their minds and refer to when they look at a given product.
  27. Price Adjustment Strategies Promotional Pricing Promotional pricing is temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales.
  28. Price Adjustment Strategies Geographical Pricing Geographical pricing is used for customers in different parts of the country or the world. • FOB-origin pricing • Uniform-delivered pricing • Zone pricing • Basing-point pricing • Freight-absorption pricing
  29. Price Adjustment Strategies Geographical Pricing FOB-origin (free on board) pricing is a geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination. Uniform-delivered pricing is a geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location.
  30. Price Adjustment Strategies Geographical Pricing Zone pricing is a strategy in which the company sets up two or more zones where customers within a given zone pay the same price. Basing-point pricing means that a seller selects a given city as a “basing point” and charges all customers the freight cost from that city to the customer.
  31. Price Adjustment Strategies Geographical Pricing Freight-absorption pricing is a strategy in which the seller absorbs all or part of the freight charges in order to get the desired business. 11-26
  32. Price Adjustment Strategies Dynamic and Internet Pricing Dynamic pricing involves adjusting prices continually to meet the characteristics and needs of individual customers and situations.
  33. Price Adjustment Strategies International Pricing International pricing sets prices in a specific country based on many factors. • Economic conditions • Competitive situations • Laws and regulations • Wholesaling and retail systems
  34. Price Changes Initiating Pricing Changes Price cuts occur due to: • Excess capacity • Increased market share Price increases occur due to: • Cost inflation • Increased demand • Lack of supply
  35. Price Changes Buyer Reactions to Pricing Changes Price increases • Product is “hot” • Company greed Price cuts • New models will be available • Models are not selling well • Quality issues
  36. Price Changes Competitor Reactions to Pricing Changes • Why did the competitor change the price? • Is the price cut permanent or temporary? • Is the company trying to grab market share? • Is the company doing poorly and trying to increase sales? • Is it a signal to decrease industry prices to stimulate demand? Copyright © 2016 Pearson Education, Inc. 11-33
  37. Price Changes Responding to Price Changes

Notes de l'éditeur

  1. A firm considering a price change must worry about the reactions of its competitors as well as those of its customers. Competitors are most likely to react when the number of firms involved is small, when the product is uniform, and when the buyers are well informed about products and prices. How can the firm anticipate the likely reactions of its competitors? The problem is complex because, like the customer, the competitor can interpret a company price cut in many ways. The company must guess each competitor’s likely reaction. Figure 11.1 on the next slide explores this issue further.