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Developing Pricing Strategies

Price is the only element of the marketing mix that generates revenue and pricing decisions must consider many complex factors related to the company, customers, competition and market environment. Pricing strategies must account for how digital technologies allow buyers to easily compare prices and sellers to tailor personalized offers. Selecting the appropriate pricing objective and method requires determining demand, estimating costs, analyzing competitors, and adapting prices based on factors like location, discounts and promotions. Effective pricing also changes over time in response to cost fluctuations, demand shifts and competitive responses.

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Shimanta Easin
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38 views

Developing Pricing Strategies

Price is the only element of the marketing mix that generates revenue and pricing decisions must consider many complex factors related to the company, customers, competition and market environment. Pricing strategies must account for how digital technologies allow buyers to easily compare prices and sellers to tailor personalized offers. Selecting the appropriate pricing objective and method requires determining demand, estimating costs, analyzing competitors, and adapting prices based on factors like location, discounts and promotions. Effective pricing also changes over time in response to cost fluctuations, demand shifts and competitive responses.

Uploaded by

Shimanta Easin
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 17

DEVELOPING PRICING

STRATEGIES
PRICE
Price is the only element of the Marketing Mix that
produces revenue; other elements produce cost.

Price also communicates the company’s intended value


positioning of its product or brand.

Pricing decisions are complex and must take into account


many factors-the company, the customers, the
competition, and the marketing environment.
Understanding Pricing
2|3

 Pricing in a digital world


 Buyers can do-
◼ Instant
price comparisons
◼ Name their price and have it met

 Sellers can
◼ Monitor customers and tailor offers
 Both buyers and seller can negotiate price in online
auctions
Consumer Psychology and Pricing
2|4

 Reference prices
Consumer Psychology and Pricing
2|5

 Price-Quality inferences

 Price endings
2|6
Selecting the pricing objective
2|7

 Survival
 Overcapacity, intense competition, changing consumer wants
 Short run objective
 Maximum Current Profit
 Assumes that the firm knows its demand and cost functions
 Maximum Market Share/Market Penetration Pricing
 Market is highly price sensitive
 Accumulated production experience (production and distribution)
 Low price discourages competition
Selecting the pricing objective
2|8

 Maximum Market Skimming


 Exclusive R&D is a must: Sony, Samsung, Apple
 Product-Quality Leadership
 Affordable luxuries: BMW, Starbucks
 Combination of quality, luxury, and premium prices
 Other objectives
 Nonprofit and public organizations aims for partial cost recovery
Determining Demand
2|9

 Price sensitivity
 Demand curves
 Price elasticity of demand
Estimating Costs
2 | 10

 Fixed costs
 Variable costs
 Total costs
 Average costs
 Accumulated production
 Target Costing
Analyzing competitors’
2 | 11

 Analyzing competitors’ –
 Costs

 Price

 Offers
Selecting a Pricing Method
2 | 12

 Markup Pricing
 Target-Return Pricing
 Perceived Value Pricing
 Value Pricing
 Everyday Low Price (EDLP)
 Going-Rate Pricing
 Auction-Type Pricing
Selecting the final price
2 | 13

 Impact of other marketing activities


 Company pricing policies
 Gain-and-risk sharing pricing
 Impact of price on other parties: distributers, retailers
Adaptive pricing
2 | 14

 Geographical Pricing
 Price discounts and allowances
 Promotional Pricing
 Differentiated Pricing
 Price discrimination
Price changes
2 | 15

 Initiating Price Cuts


 Low quality trap
 Fragile-market-share trap

 Shallow-pocket trap

 Price-war trap

 Initiating Price Increase


 Costinflation
 Over demand
Price changes
2 | 16

 Anticipating competitive responses


 Responding to competitors’ price changes
 Why does the price change?
 Temporary or permanent?

 What will happen to market share and profit?

 Other firms’ responses


THANK YOU

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