chapter foundations of chapter m a r k e t i n g managing the pricing function 14
TRANSCRIPT
Chapterfo
unda
tions
of ChapterM A R K E T I N G
Managing the Pricing Function
14
Chapter
Objectives
1. Understand the benefits of the marketing approach to pricing.
2. Present a useful model for settling a price.
3. Explain the importance of establishing pricing policies before individual prices are set.
4. Understand an apply skimming and penetration pricing strategies.
5. Describe how prices are quoted.
Managing the Pricing Function 14
14-1
Chapter
A Pricing Decision Flow Chart
Managing the Pricing Function 14Figure 14.1
Consumer analysis
Legal and ethical analysis
Discounts
MarketingStrategy
PricingObjectives
PriceRange
InitialPrice
FinalPrice
Profit andMarketing
Mix Analysis
Economic analysis
Cost analysis
Competitive analysis
Polices
14-2
Chapter
The Role of Pricing Objectives in Contemporary Marketing
Managing the Pricing Function 14Figure 14.2
Profitability
4. Pricingpolicies andprocedures
Volume
Meeting competition
Prestige
1. Company objectives
2. Marketing objectives
3. Pricing objectives
14-3
Chapter
Price and Marketing Mix
Profit maximizationThe point where the addition to total revenue is just balanced by an increase in total cost.
Managing the Pricing Function 14
14-4
Chapter
Target Return Objectives
• Either short-run or long-run goals, usually stated as a percentage of sales or investments.
Managing the Pricing Function 14
14-5
Chapter
Sales maximization• The pricing philosophy analyzed by
economist William J. Beaumol. Beaumol believes that many firms attempt to
maximize sales within a profit constraint.
Market share objective• To control a specific portion of the
market for the firm’s product.
Managing the Pricing Function 14
14-6
Chapter
Status Quo Objectives
• Objectives based on maintaining stable prices.
Managing the Pricing Function 14
14-7
Chapter
Prestige Objectives
• Establishing relatively high prices in order to develop and maintain an image of quality and exclusiveness.
Managing the Pricing Function 14
14-8
Chapter
Pricing Policy and Price Structure
Pricing PolicyA general guideline based on pricing objectives that is intended for use in specific pricing decisions.
Price StructureAn outline of the selling price and the various discounts offered to intermediaries.
Managing the Pricing Function 14
14-9
Chapter
New Product Pricing Policies
Pricing Policy1. Skimming2. Penetration
Managing the Pricing Function 14
14-10
Chapter
Skimming Pricing
• Choosing a high entry price; to sell first to consumers who are willing to pay the highest price, and then reduce the price.
Managing the Pricing Function 14
14-11
Chapter
Penetration Pricing
• An entry price for a product that is lower than what is estimated to be the long-term price.
Managing the Pricing Function 14
14-12
Chapter
Flexible Pricing
• A variable price policy.
Managing the Pricing Function 14
14-13
Chapter
Pricing Practices
1. Price Lining2. Promotional Prices3. Psychological Pricing 4. Unit Pricing
Managing the Pricing Function 14
14-14
Chapter
Price Lining and Promotional Price
Price LiningThe practice of marketing merchandise at a limited number of prices.
Promotional PriceA lower-than-normal price used as an ingredient in a firm’s selling strategy.
Managing the Pricing Function 14
14-15
Chapter
Psychological Pricing and Unit PricingPsychological Pricing
The use of prices to suggest values of a product or attributes of a product/price offering.
Unit PricingStating prices in terms of some recognized unit of measurement (such as grams and litres) or a standard numerical count.
Managing the Pricing Function 14
14-16
Chapter
Loss Leader
• Goods priced below cost to attract customers.
Managing the Pricing Function 14
14-17
Chapter
Odd Pricing
• Prices are set ending in some amount just below the next rounded number.
Managing the Pricing Function 14
14-18
Chapter
Price Limits
• Limits within which product quality perception varies directly with price.
Managing the Pricing Function 14
14-19
Chapter
Price Quotations
List priceThe rate normal quoted to potential buyers.
Market price The amount that a consumer pays.
Managing the Pricing Function 14
14-20
Chapter
Price Quotations
1.List price2.Discounts
a) Cashb) Tradec) Quantity
Managing the Pricing Function 14
3.Allowances
a) Trade-In
b) Promotional
4.Rebates
14-21
Chapter
Cash discountReduction in price that is given for prompt payment of a bill.
Trade discount Payment to channel members or buyers for performing some marketing function normally required of the manufacturer.
Quality discountPrice reduction granted for large purchases.
Managing the Pricing Function 14
14-22
Chapter
Trade-in
• Deduction from an item’s price of an amount for the customer’s old item that is being replaced.
Managing the Pricing Function 14
14-23
Chapter
Promotional Allowance
• Extra discount offered to retailers so that they will advertise the manufacturer along with the retailer.
Managing the Pricing Function 14
14-24
Chapter
Rebate
• Refund by the seller of a portion of the purchase price.
Managing the Pricing Function 14
14-25
Chapter
Geographic Considerations and Pricing
1. FOB Plant2. Freight Absorption3. Uniform Delivered Price4. Zone Pricing
Managing the Pricing Function 14
14-26
Chapter
FOB PlantThe buyer must pay all the freight.
Freight AbsorptionThe seller permits the buyer to subtract transportation expenses from the bill.
Managing the Pricing Function 14
14-27
Chapter
Uniform Delivered PriceThe same price (including transportation expenses) is quoted to all buyers.
Zone PricingThe market is divided into different zones and a price is established within each.
Managing the Pricing Function 14
14-28
Chapter
Zone Pricing for a Winnipeg Firm
Managing the Pricing Function 14Figure 14.5
14-29
Chapterfo
unda
tions
of ChapterM A R K E T I N G
Thank you for using our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…