chapter 14: developing pricing strategies & programs

DEVELOPING PRICING STRATEGIES &

PROGRAMSMARKETINGMANAGEMENTS09Golingo, AldrichS130348

CONTENT:

• #BecausePriceMatters• #ItsBuyersVsSellers• #ConsumersPriceResponses• #SettingTheRightPrices• #EffectivePricingStrategies

#BecausePriceMatters

#ItsBuyersVsSellers

• Getinstantpricecomparisonsfromthousandsofvendors.

• Nametheirpriceandhaveitmet

• Getproductsfree.

• Monitorcustomerbehaviorandtailorofferstoindividuals

• Givecertaincustomersaccesstospecialprices

• Negotiatepricesinonlineauctionsandexchangesoreveninperson

#ConsumersPriceResponses• Fairprice(whatconsumersfeeltheproductshouldcost)

• TypicalPrice

• LastPricePaid

• Upper-BoundPrice(reservationpriceorthemaximummostconsumerswouldpay)

• Lower-BoundPrice(lowerthresholdpriceortheminimummostconsumerswouldpay)

• HistoricalCompetitorPrices

• ExpectedFuturePrice

• UsualDiscountedPrice

#SettingTheRightPrices• STEP1: SelectingthePriceobjective

• Survival,MaximumCurrentProfit,MaximumMarketShare,MaximumMarketSkimming,product– QualityLeadership

• STEP2:DeterminingDemand• PriceSensitivity,EstimatingDemandCurves,PriceElasticityofDemand,

• STEP3:EstimatingCosts• TypesofCosts&LevelsofProduction,AccumulatedProduction,TargetCosting,

• STEP4:AnalyzingCompetitors’Cost,PricesandOffers

• STEP5:SelectingaPricingMethod• MarkupPricing,Target-ReturnPricing,Perceived– ValuePricing,ValuePricing,Going-RatePricing,Auction– TypePricing

• STEP6:SelectingtheFinalPrice

#EffectivePricingStrategies• GEOGRAPHICALPRICING

• Barter

• Compensationdeal

• BuybackArrangement

• Offset

• PRICEDISCOUNTSANDALLOWANCES

• PROMOTIONALPRICING• Loss-leaderpricing

• Specialeventpricing

• Specialcustomerpricing

• Cashrebates

• Lowinterestfinancing

• Longerpaymentterms

• Warranties&servicecontracts

• Psychologicaldiscounting

• DIFFERENTIATEDPRICING

DEVELOPING PRICING STRATEGIES & PROGRAMS

SUMMARY:

• Understandingpricing

• PricingEnvironment

• Settingprices

• RespondingtoPriceChanges

• AdaptingPrices