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Pricing Strategy . What we learned from the chapter . Different strategies used in determining the price of an item and price adjustment base upon customer differences .  some real life examples are given in some sections. Market-skimming pricing. Set high initial price to skim market Ex:-

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Presentation Transcript
what we learned from the chapter
What we learned from the chapter
  • Different strategies used in determining the price of an item and price adjustment base upon customer differences .
  •  some real life examples are given in some sections
market skimming pricing
Market-skimming pricing
  • Set high initial price to skim market
  • Ex:-
  • Sony introduced first hdtv in 1990 with 43,000 $ then it rapidly reduced to 6000 $ in 2001
market penetration pricing
Market- penetration pricing
  • Small initial price but profitable market segment to attract large number of buyers and market share
  • Ex:-
  • dell used market penetrating strategy
  • also China
product mix pricing strategies
Product Mix Pricing Strategies
  • Product line pricing
  • Optional- product pricing
  • Captive- product pricing
  • By-product pricing
  • Product bundle pricing
product line pricing
Product line pricing
  • Setting price steps between product line items
  • Ex:-
  • Car models
  • Clothing store set three price levels based upon the quality (low ,average , high)
optional product pricing
Optional- product pricing
  • Selling accessories optional with the main product
  • Problem : to decide which the main product and the options
  • Ex:-
  • refrigerators come with ice makers
  • cars have many accessories
captive product pricing
Captive- product pricing
  • Product which must be used along with the main product
  • Product low price and the profit from captive product
  • Ex:-
  • printers are captured by the price of ink cartridges
by product pricing
By-product pricing
  • refers to products with little or no value produced as a result of the main product.
  • Ex:-
  • petroleum's products and processed meats products they are derived of a main product.
product bundle pricing
Product bundle pricing
  • Group some products and offering the bundle at a reduced price
  • EX:-
  • fast food restaurants bundle a burger ,fries and soft drink in a combo price
  • resorts sells special vacation package
price adjustment strategies
Price-Adjustment Strategies
  • Adjust the basic prices to account for various customer differences and changing situations.
price adjustment
  • Discounts :

cash discounts

functional discount

seasonal discount

  • Allowances
price adjustment1
  • Segmented pricing : when a company sells a product at two or more prices
  • Why we need it ?

Psychological pricing

      • sale signs
      • prices ending in 9
      • loss leader pricing
      • pricing matching guarantee
  • Reference prices : are prices that buyers carry in their minds
price adjustment2

Promotional pricing : is when prices are temporarily priced below list price or cost to increase demand

  • Special event pricing
  • Cash rebates
  • Low-interest financing
  • Longer warrantees
  • Free maintenance
price adjustment3
  • Risks of promotional pricing
  • Any idea ?

1- easy to get into but hard to get out of it 

2- customers may wait for promotions and

avoid buying at regular price

3- Creates price wars

price adjustment4

Geographical pricing is used for customers in

different parts of the country or the world

• FOB-origin pricing

• Uniformed-delivered pricing

• Zone pricing

• Basing-point pricing

• Freight-absorption pricing

price adjustment5

International pricing is when prices are set in a

specific country based on country-specific factors

• Economic conditions

• Competitive conditions

• Laws and regulations

• Infrastructure

• Company marketing objective

are these strategies similar for all specialization
Are these strategies similar for all specialization ?
  • May differ in B2B marketing why?
  • Business buyers tend to buy for “rational” reasons while consumers tend to buy for “emotional” reasons.  Of course there are exceptions to this generalized rule. 
  • Business buyers are demanding hard facts to justify an expenditure, most notably a strong return on investment (ROI).
  • In a B2B sales process, we are often dealing with multiple influencers and decison makers, who each have their own set of buying criteria.