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BSAD 102 Mike’s Bikes Business Simulation. St. Francis Xavier University. Pricing Strategies. Pricing strategy The pricing plan based on the marketing mix Potential strategies Pricing Existing Products Pricing relative to the market (at market, above market, below market)

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BSAD 102 Mike’s Bikes Business Simulation


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    1. BSAD 102Mike’s BikesBusiness Simulation St. Francis Xavier University

    2. Pricing Strategies • Pricing strategy • The pricing plan based on the marketing mix • Potential strategies • Pricing Existing Products • Pricing relative to the market (at market, above market, below market) • Pricing New Products • Skimming pricing - Pricing the product as low as possible to sell the most units and generate consumer loyalty • Penetration pricing - Pricing the product as high as possible to earn maximum profit on each unit sold • Fixed Versus dynamic Pricing for Ebusiness

    3. Pricing Tactics • Price lining • The practice of offering all items in certain categories at a limited number of predetermined price points • Having a product line priced with a low, medium, and high price point • Sears may sell mattresses at $199.99 (good), $299.99 (better), $399.99 (best)

    4. Pricing Tactics • Psychological Pricing • The practice pf setting prices to take advantage of the illogical reactions of consumers to certain types of prices • Odd-even pricing • consumers react more favourably to odd dollar amounts ($0.99, $1.99, $19.99) • Threshold pricing • consumers set a maximum price level that they will pay for an item • pricing at the maximum allows firms to obtain the highest price

    5. Pricing Tactics • Discounting • Cash discount • customers get a lower price for paying cash • Seasonal discount • lower prices in the off-season to move stock • Trade discount • lower price granted to intermediaries who need to mark up the product for resale (retailers, wholesalers) • Quantity discount • lower prices for buying more units

    6. Promotion • Key objectives • Increase product awareness • Increase knowledge of products and their added-values • Increase product preference • Increase product purchase

    7. Promotion Plan Objectives Strategies Promotional Mix Information Positioning Added value Sales volume Push vs. Pull Advertising Personal selling Sales promotion Publicity

    8. Advertising Media • Newspapers • Television • Direct mail • Radio • Magazines • Outdoor • Word-of-mouth • Internet

    9. Sales Promotions • Coupons • Point-of-purchase (POP) displays • Purchase incentives/premiums (free item or bargain price) • Trade shows • Contests and sweepstakes

    10. Publicity and Public Relations • Publicity • Information made available to consumers via the news media • Company has no control over it • Free to the company • Public relations • Public service announcements initiated by the firm • Designed to enhance the firm’s image

    11. Directions • Get in Groups • Find a computer • Login with one St. FX login / password • Access one Mike’s Bikes login / password from your email • WebFX Apps on Desktop  Mikes Bikes Advanced folder  Double click Intro Multi Player • Review results St. Francis Xavier University

    12. Results • World results • Review your firm’s / competitors’ results • Reports • Strengths? Weaknesses? Key determinants? • Examples St. Francis Xavier University

    13. Managing • Managing Information • Scenario Report • Important reports • Year ahead • Industry benchmark • All product details • Market report (estimated lost sales) • Sales, margin, production • Forecast report • Decisions made • Financial management overview • I/S history St. Francis Xavier University

    14. Planning • Your task • Analyze consumer information • Scenario Information • Select a product strategy (price/volume) • Decide on • sales forecast (market size, product strategy, competition) • promotional spending (funds available, consumer sensitivities) • production required (sales forecast, inventory, capacity) • What will you do the same? Different? You can’t be everything to everyone – how will you compete? St. Francis Xavier University

    15. Advice • Read the players handbook • Consider playing offline • Make decisions with good basis • Strategy • Market information • Resources available St. Francis Xavier University

    16. Next • Rollback will occur Thursday morning at 9 a.m. Have your decisions input by 4 pm Friday – the first real “rollover” of your decisions will take place at this time, after which you may check your results. • We will present and discuss results in Monday’s class. For this class complete the following: • Meet with your group to review the important reports that outline your firm’s / competitors’ performance • Review your responsibilities for the year ahead • Read pages 539-548 and 491-496 in your text St. Francis Xavier University

    17. Midterm Results