Marketing pricing strategies
This presentation is the property of its rightful owner.
Sponsored Links
1 / 18

MARKETING Pricing Strategies PowerPoint PPT Presentation


  • 167 Views
  • Uploaded on
  • Presentation posted in: General

MARKETING Pricing Strategies. Overview. Definition of price Factors that influence the pricing decision Pricing objectives Pricing strategies over the product life cycle Three major pricing strategies and their advantages and disadvantages

Download Presentation

MARKETING Pricing Strategies

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Marketing pricing strategies

MARKETINGPricing Strategies

Prof. Bauer-Ramazani


Overview

Overview

  • Definition of price

  • Factors that influence the pricing decision

  • Pricing objectives

  • Pricing strategies over the product life cycle

  • Three major pricing strategies and their advantages and disadvantages

  • Exercises applying different pricing strategies

  • Pricing tactics


Marketing pricing strategies

Price -- Definition

  • the amount of money charged for a product or service

  • the sum of all the values that consumers exchange for the benefits of having or using the product or service

  • Examples of “price?”

    • Tuition, rent, fare, retainer, toll, salary, dues


Factors in setting price

Factors in Setting Price


Pricing objectives

Pricing Objectives


Determining prices

Determining Prices

Market Share

Profit-Maximization

Meet

Business

Objectives

Cost-Oriented- Variable/Fixed

  • Other Pricing Objectives

  • Loss Containment

  • Survival

  • Customer Benefit

  • Social & Ethical Considerations

Break-even Analysis

Price-Setting

Tools

Economic Supply/Demand


Equilibrium price supply demand

Equilibrium Price: Supply = Demand

Price perflash drive/memory stick

Number of flash drives/memory sticks demanded


Elasticity of demand

Inelastic Demand

Price

Electricity

P2

P1

Q2 Q1

Quantity

Elastic Demand

Price

Recreational

Vehicles

P2

P1

Q1

Q2

Quantity

Elasticity of Demand

measure of the sensitivity of demand to changes in prices

not price sensitive - no real change in demand

price sensitive - changes in demand


Market based pricing

Market-based Pricing

  • PricingExisting Products/Services- 3 options

    • Pricing belowmarket prices  price wars

      • EX: airlines, store brand vs. manufacturer’s brand

      • Dumping

    • Pricing above prevailing market prices for similar products

      • EX: Sony  higher price = higher quality?

    • Pricing at or near market prices


Breakeven analysis

Breakeven Analysis


Breakeven point formula

Breakeven Point Formula

Breakeven Quantity=

Fixed Costs

Price/unit –Variable cost/unit

(Contribution Margin)


Cost based pricing

Cost-based Pricing

  • Estimating the per-unit cost of production

    • Capital(K): land, building, equipment = fixed cost(FC)

    • Labor (L): workers’ wages = variable cost (VC)

      EX: $0.50 + $0.50 =$1.00 (production cost)

  • Adding a mark-up

    • Desired profit per item: $0.50

  • Sales price = cost of production + mark-up

    • $1.00 + $0.50 = $1.50

    • 50% markup


Mark up calculation

Mark-up Calculation


How costs affect gasoline prices

How costs affect gasoline prices


Price strategies for new products

Penetration

Low price establish product in the market

Elastic demand; Predatory pricing

Skimming

High price; unique product; appeal to early adopters; Prestige pricing

Recovering high R&D costs

Combination

Move inventory; stimulate D; extend product life

Price Strategies for New Products

Penetration Price Strategy

PRICE

Skimming Price Strategy

PRICE

Skimming > Penetration

PRICE


Pricing of iphones

Pricing of iPhones


Exercise select the appropriate pricing strategy explain your choice

Wal-Mart launches a new range of own-label soups.

Cunard launches two new cruise ships.

A cable TV provider moves into a new area and needs to achieve a market share.

Holiday Inns try to fill hotels during winter weekends.

Burger King introduces a new range of value meals.

Nokia launches a new videophone.

ExerciseSelect the appropriate pricing strategy. Explain your choice.


Pricing tactics

Pricing Tactics

  • Price Lining

    • Setting a limited number of prices for certain categories of products

  • Psychological Pricing

    • Pricing to take advantage of the fact that consumers do not always respond rationally to stated prices

  • Discounting

    • Price reductions offered as an incentive

      • to purchase

  • High tech Pricing: giving it away!


  • Login