Chapter 9 Pricing StrategyIntroduc-tion
Slides
Cases
Questions
Readings BACK
问题的提出平价大药房缘何走俏上海
1,Price Setting
2.Price Adapting
3.Price Changes
4
The amount of money charged for a
product or service,or the sum of the
values that consumers exchange for
the benefits of having or using the
product or service,
What is Price?
5
1.Factors affecting price decisions
Internalfactors
Marketing
objectives;
Marketing
mix strategy;
Costs;
Organizational
consideration
External factors
Nature of the
market and
demand;
Competitors;
Other
environment
factors(economy,
reseller,
government
Pricing
decision
6
The Three C’s Model for Price Setting
Costs Competitors’prices and
prices of
substitutes
Customers’assessment
of unique
product
features
Low Price
No possibleprofit at
this price
High Price
No possibledemand at
this price
7
2.Setting Pricing Policy
1,Selecting the pricingobjective
2,Determining demand
3,Estimating costs
4,Analyzing competitors’costs,prices,and offers
5,Selecting a pricingmethod
6,Selecting final price
8
3,Pricing Objectives
(1) Survival
Low price
(2) Sales
Maximum current revenue
Maximum sales growth
9
(3) Profit
Maximum market skimming
Maximum current profit
(4) Market leadership,Market share
(5) Product-quality leadership
10
Types of Costs
Total Costs
Sum of the Fixed and Variable Costs for a Given
Level of Production
Fixed Costs
(Overhead)
Costs that don’t
vary with sales or
production levels.
Executive Salaries
Rent
Variable Costs
Costs that do vary
directly with the
level of production.
Raw materials
11
Demand Curve
Demand Elasticity
Q/Q
P/P
dQ
dP
P
Q
e ＝ -
＝ -
Customer
12
Factors Affecting Price Sensitivity
Unique-Value Effect
Substitute-Awareness Effect
Difficult-Comparison Effect
Total-Expenditure Effect
Shared-Cost Effect
Sunk-Investment Effect
Price-Quality Effect
Inventory Effect
13
Cost?Suppliers? Market Share
Market Offers
Competitor
14
4,Pricing Methods
Cost –Oriented Pricing
Value-Oriented
Pricing
Competition-Oriented
Pricing
Markup Pricing
Target Return Pricing
Perceived Value Pricing
Value Pricing
Going-Rate Pricing
Sealed-Bid Pricing
Auction
15
New-product Pricing
Promotional Pricing
Psychological Pricing
Discriminatory Pricing
5,Pricing Adapting
16
Price
High Medium Low
High
LowP
ro
du
ct
Q
ua
lity
Med
Premium
Value
Medium
Value
Economy
Overcharging
Rip-Off FalseEconomy
High
Value
Super
Value
Good-Value
New product Pricing,Price - Quality Strategies
17
Price
High Medium Low
High
LowP
ro
du
ct
Q
ua
lity
Med
Benz
VW
FIAT
Overcharging
Rip-Off FalseEconomy
LEXUS SuperValue
Good-Value
New product Pricing,Price - Quality Strategies
18
Market-Skimming
Pricing
High quality and
image,enough buyer；
Cost is not high for
smaller volume；
Competitors hardly
enter the market。
Market-Penetration
Pricing
Market is high
price sensitive；
Cost is falling as
sales volume increase；
Low price can keep
out the competition。
19
Product-Mix Pricing
STRATEGY DESCRIPTION
Product line pricing Setting price steps between product
line items。
Optional-product pricing Pricing optional or accessory products
sold with the main product。
Captive-product pricing Pricing products that must be used
with the main product。
By-product pricing Pricing low-value by-products to get
rid of them。
Product-bundle pricing Pricing bundles of products sold
together。
20
Promotional Pricing
Loss-leader pricing
Special-event pricing
Cash rebates
Low-interest financing
Longer payment terms
Warranties & service contracts
Psychological discounting
21
Psychological Pricing
Most Attractive?
Better Value?
Psychological reason to
price this way?
A
32 oz.
$2.19
B
26 oz.
$1.99
Assume Equal Quality
22
Discriminatory Pricing
Time
Product-form
Customer Segment
Location
23
6,Pricing Changes
(1),Initiating Price Changing
Initiating price cuts
Initiating price increases
24
Circumstances leading price cutting
Excess plant capacity
Declining market share
Dominate market through
lower cost
In the period of economic
recession
gaining market share
25
Possible traps relating to the price cutting
Low-quality trap
Consumers will
assume that the
quality is low
Fragile-MS-trap
Low price buys
MS but not
market loyalty
Shallow-pockets
trap
Competitors have
longer staying power
because of deeper
cash reserves
26
Factors leading to price increasing
Cost Inflation
Over-demand
Product quality improvement
Less competition
27
Delayed quotation pricing
Use of escalator clauses
Unbundling of goods and services
Reduction of discounts
Price increasing options
28
Maintain price
Raise perceived quality
Reduce price
Increase price and quality
Launch low-price fighter line
(2) Responding to Price changes
29
Has competitor
cut his price
Is it likely to
significantly
hurt our sales?
No
hold current price
keep on watching
Cut price
Yes
Yes
No
Reactions
are needed?
Yes No Raise perceivedquality
Raise quality and price
Launch low price brand
30
1.欺诈价格问题
2.低价倾销问题
3.价格串谋问题
4.自律价格与保护价格问题
5.其他问题七、定价策略的社会问题长虹公司的降价策略案例精选回第九章起始目录
Slides
Cases
Questions
Readings BACK
问题的提出平价大药房缘何走俏上海
1,Price Setting
2.Price Adapting
3.Price Changes
4
The amount of money charged for a
product or service,or the sum of the
values that consumers exchange for
the benefits of having or using the
product or service,
What is Price?
5
1.Factors affecting price decisions
Internalfactors
Marketing
objectives;
Marketing
mix strategy;
Costs;
Organizational
consideration
External factors
Nature of the
market and
demand;
Competitors;
Other
environment
factors(economy,
reseller,
government
Pricing
decision
6
The Three C’s Model for Price Setting
Costs Competitors’prices and
prices of
substitutes
Customers’assessment
of unique
product
features
Low Price
No possibleprofit at
this price
High Price
No possibledemand at
this price
7
2.Setting Pricing Policy
1,Selecting the pricingobjective
2,Determining demand
3,Estimating costs
4,Analyzing competitors’costs,prices,and offers
5,Selecting a pricingmethod
6,Selecting final price
8
3,Pricing Objectives
(1) Survival
Low price
(2) Sales
Maximum current revenue
Maximum sales growth
9
(3) Profit
Maximum market skimming
Maximum current profit
(4) Market leadership,Market share
(5) Product-quality leadership
10
Types of Costs
Total Costs
Sum of the Fixed and Variable Costs for a Given
Level of Production
Fixed Costs
(Overhead)
Costs that don’t
vary with sales or
production levels.
Executive Salaries
Rent
Variable Costs
Costs that do vary
directly with the
level of production.
Raw materials
11
Demand Curve
Demand Elasticity
Q/Q
P/P
dQ
dP
P
Q
e ＝ -
＝ -
Customer
12
Factors Affecting Price Sensitivity
Unique-Value Effect
Substitute-Awareness Effect
Difficult-Comparison Effect
Total-Expenditure Effect
Shared-Cost Effect
Sunk-Investment Effect
Price-Quality Effect
Inventory Effect
13
Cost?Suppliers? Market Share
Market Offers
Competitor
14
4,Pricing Methods
Cost –Oriented Pricing
Value-Oriented
Pricing
Competition-Oriented
Pricing
Markup Pricing
Target Return Pricing
Perceived Value Pricing
Value Pricing
Going-Rate Pricing
Sealed-Bid Pricing
Auction
15
New-product Pricing
Promotional Pricing
Psychological Pricing
Discriminatory Pricing
5,Pricing Adapting
16
Price
High Medium Low
High
LowP
ro
du
ct
Q
ua
lity
Med
Premium
Value
Medium
Value
Economy
Overcharging
Rip-Off FalseEconomy
High
Value
Super
Value
Good-Value
New product Pricing,Price - Quality Strategies
17
Price
High Medium Low
High
LowP
ro
du
ct
Q
ua
lity
Med
Benz
VW
FIAT
Overcharging
Rip-Off FalseEconomy
LEXUS SuperValue
Good-Value
New product Pricing,Price - Quality Strategies
18
Market-Skimming
Pricing
High quality and
image,enough buyer；
Cost is not high for
smaller volume；
Competitors hardly
enter the market。
Market-Penetration
Pricing
Market is high
price sensitive；
Cost is falling as
sales volume increase；
Low price can keep
out the competition。
19
Product-Mix Pricing
STRATEGY DESCRIPTION
Product line pricing Setting price steps between product
line items。
Optional-product pricing Pricing optional or accessory products
sold with the main product。
Captive-product pricing Pricing products that must be used
with the main product。
By-product pricing Pricing low-value by-products to get
rid of them。
Product-bundle pricing Pricing bundles of products sold
together。
20
Promotional Pricing
Loss-leader pricing
Special-event pricing
Cash rebates
Low-interest financing
Longer payment terms
Warranties & service contracts
Psychological discounting
21
Psychological Pricing
Most Attractive?
Better Value?
Psychological reason to
price this way?
A
32 oz.
$2.19
B
26 oz.
$1.99
Assume Equal Quality
22
Discriminatory Pricing
Time
Product-form
Customer Segment
Location
23
6,Pricing Changes
(1),Initiating Price Changing
Initiating price cuts
Initiating price increases
24
Circumstances leading price cutting
Excess plant capacity
Declining market share
Dominate market through
lower cost
In the period of economic
recession
gaining market share
25
Possible traps relating to the price cutting
Low-quality trap
Consumers will
assume that the
quality is low
Fragile-MS-trap
Low price buys
MS but not
market loyalty
Shallow-pockets
trap
Competitors have
longer staying power
because of deeper
cash reserves
26
Factors leading to price increasing
Cost Inflation
Over-demand
Product quality improvement
Less competition
27
Delayed quotation pricing
Use of escalator clauses
Unbundling of goods and services
Reduction of discounts
Price increasing options
28
Maintain price
Raise perceived quality
Reduce price
Increase price and quality
Launch low-price fighter line
(2) Responding to Price changes
29
Has competitor
cut his price
Is it likely to
significantly
hurt our sales?
No
hold current price
keep on watching
Cut price
Yes
Yes
No
Reactions
are needed?
Yes No Raise perceivedquality
Raise quality and price
Launch low price brand
30
1.欺诈价格问题
2.低价倾销问题
3.价格串谋问题
4.自律价格与保护价格问题
5.其他问题七、定价策略的社会问题长虹公司的降价策略案例精选回第九章起始目录
