Pricing policy

1. Pricing policy Prerequisites: Resource 265 "Targeting your customers" Resource 1549 "Positioning your offer" Resource 268 "Presentation of the marketing mix"

2. Objectives in terms of expertise Act on the price variable Know how to propose a retail price Know how to argue in favour of this choice Know how to change the price

3. Objectives in terms of content A definition of the concept Fixing methods Reactions to changes in price Laurence Chérel and Catherine Madrid

4. The transverse nature of the teaching: Laurence Chérel and Catherine Madrid

5. dEfiniNG THE priCE Laurence Chérel and Catherine Madrid

6. THE PRICE: • A monetary expression of the value • Value appreciated in exchange for an expected satisfaction • Resource to consult: The importance of perceived value Laurence Chérel and Catherine Madrid

7. Value is perceived: Resource to consult: 2012 price image barometer By OC&C Strategy Consultants 

8. Notion of perceived value: in time Laurence Chérel and Catherine Madrid

9. In effort Laurence Chérel and Catherine Madrid

10. FIXING METHODS Laurence Chérel and Catherine Madrid

11. Fixing a price: Traditional and other more recent methods N.B. choose just one fixing method Laurence Chérel and Catherine Madrid

12. traditionALMETHODS Laurence Chérel and Catherine Madrid

13. The traditional method INTERNAL ASPECTS EXTERNAL ASPECTS Marketing goal Positioning Cost analysis Acceptability by the market Competition Regulations PRICE Resource to consult: study of the acceptability of a price by the market

14. Comparison between skimming and penetration Laurence Chérel and Catherine Madrid

15. PENETRATION POLICY • Fix a pricethatmaximizesdemand • to makeyour mark from the outset in a large section of the market • In cases where: • demandiselasticdepending on price, • the company has sufficient production capacity • and introducesappropriate distribution and communication policies Laurence Chérel and Catherine Madrid

16. SKIMMING POLICY • Sellat a highprice by restrictingyourself to a group of buyerswho are prepared to pay a highprice • In cases where: • demandisinelasticdepending on price, • a fairly short life cycle, • the productcanberapidlyimitated, • a low, fairlyunprofitableprice. Laurence Chérel and Catherine Madrid

17. RECENT mEthods Laurence Chérel and Catherine Madrid

18. The role of price against a background of bi-polar consumption • Hallmark attribute for the choice of a basic product • the individual is looking for functional value at a lower price • in a hyper-competitive environment • A challenge to the traditional price-fixing model Laurence Chérel and Catherine Madrid

19. Price and contemporary context Price Skimming policy Penetration policy Basic product quality

20. Example of a contemporary price-fixing context 3,73 €/kg 2,80 €/kg 1,88 €/kg

21. The target price (or alignment with the competition) • The price war has an impact on • The consumer • Human resources management • The need to differentiate yourself in other ways to get away from the price war environment • Resource to consult: “too many low prices kill low prices” Laurence Chérel and Catherine Madrid

22. Flunch: "a menu idea with tasty dishes and big portions at a very nice price: 4€95."

23. The New Deal offer • Creating new market conditions by differentiating yourself in other ways • Offering better value for money through innovation. • Resource to consult: household appliance rental at Intermarché Laurence Chérel and Catherine Madrid

24. An example of a new deal offerHP envy 5640

25. The Every Day Low Price (EDLP) • Aim: to put an end to promotional one-upmanship by offering low, stable prices • How: through a better organization of all the company’s processes, Laurence Chérel and Catherine Madrid

26. E.D.L.P.: examples: The Club Méditerranée Best Offerguarantee Little Extra: pleasureatlowprices Laurence Chérel and Catherine Madrid

27. Summary

28. The price-fixing process Laurence Chérel and Catherine Madrid

29. rEactions TO CHANGES IN price Laurence Chérel and Catherine Madrid

30. Buyers’ reactions to changes in price • Possible perceptions of a reduction in price • the product is selling badly • the product will be replaced • the quality has fallen • the price is going to fall further, it would be better to wait • Possible perceptions of a rise in price • strong demand and a risk of shortages • risk of a further increase • the price is fixed at the maximum tolerated by the market

31. Competitors’ reactions to changes in price • Problem of anticipating the competitor’s reactions • analyze the statistics of his previous reactions • analyze his strategy Laurence Chérel and Catherine Madrid

32. The company’s reactions to its competitors’ price changes • Maintain your price • and do nothing • counter-attack in other areas • Reduce your price • Increase and counter-attack on the product Laurence Chérel and Catherine Madrid

33. Conclusion: How to fix a price (slide nos. 25 and 26) How to adjust it to competitors’ manœuvres

34. Bibliography Desmet Pierre (2008), Le prix , MBA - Editions d’Organisation – 2nd edition / Eyrolles - Paris, 01/01/2008 KOTLER Philip, DUBOIS Bernard (2012). - Marketing management. – 14th edition. - Paris: Pearson Education, XL-841 pages. (chap 14. Choisir une stratégie de prix ) Revue Décision Marketing n° 6 dedicated to prices

35. Check your knowledge! Laurence Chérel and Catherine Madrid