DEVELOPING PRICING STRATEGIES AND PROGRAMS

Oleh : M. Hilman Azhari 335971Prima P W 346423Nurida Sandy K 346425

Understanding PricingSynonyms for Pricing

• Rent• Tuition• Fee• Fare• Rate• Toll• Premium• Honorarium

• Special assessment

• Bribe• Dues• Salary• Commission• Wage• Tax

A Changing Pricing Environment

• Get instant price comparisons from thousands of vendors

• Name their price and have it met

• Get products free

• Monitor customer behavior and tailor offers to individuals

• Give certain customers access to special prices

• Negotiate prices in online auctions and exchanges or even in person

how the internet allows sellers to discriminate between buyers

and buyers to discriminate between sellersBuyers

can :

Sellers can :

How Companies Price

Common Pricing Mistakes•Determine costs and take traditional

industry margins•Failure to revise price to capitalize on

market changes•Setting price independently of the rest of

the marketing mix•Failure to vary price by product item,

market segment, distribution channels, and purchase occasion

Consumer Psychology and Pricing

•Reference prices•Price-quality

inferences•Price endings

Table 14.1 Possible Consumer Reference Prices

Fair price”

Typical price

Last price paid

Upper-bound price

Lower-bound price

Competitor prices

Expected future price

Usual discounted price

Setting The Price

1. Selecting the Pricing Objective2. Determining Demand3. Estimating Costs4. Analyzing Competitor’s Costs,

Prices, and Offers5. Selecting a Pricing Method6. Selecting the Final Price

Step 1: Selecting the Pricing Objective

Survival

Maximum current profit

Maximum market share

Maximum market skimming

Product – quality leadership

Step 2: Determining Demand

Price sensitivity

Estimate demand curves

Price elasticity of demand

Step 3: Estimating Costs

•Types of costs•Accumulated production•Activity-based cost accounting•Target costing

Step 4 : Analyzing Competitor’s Costs, Prices, and Offers

Step 5 : Selecting a Pricing Method

•Markup Pricing•Target-Return Pricing•Perceived-Value Pricing•Value-Pricing•Going-Rate Pricing•Auction-Type Pricing

Step 6 : Selecting the Final Price

•Impact of other marketing activities•Company pricing policies•Gain-and-risk sharing pricing•Impact of price on other parties

Adapting The Price

•Geographical Pricing•Price Discount and Allowances•Promotional Pricing•Differentiated Pricing

Geographical Pricing

•Pricing varies by location

Price Discount and Allowances

•Discount•Quantity discount•Functional discount•Seasonal discount•Allowance

Promotional Pricing

•Loss-leader pricing•Special-event pricing•Cash rebates•Low-interest financing•Longer payment terms•Warranties and service contracts•Psychological discounting

Differentiated Pricing

•Customer-segment pricing•Product-form pricing•Image pricing•Channel pricing•Location pricing•Time pricing

Initiating and Responding to Price ChangesInitiating Price Cuts•Low-quality trap•Fragile-market-share trap •Shallow-pockets trap•Price-war trap

Initiating Price Cuts

•Low-quality trap•Fragile-market-share trap •Shallow-pockets trap•Price-war trap

Initiating Price Increases

•Delayed quotation pricing•Escalator clauses•Unbundling•Reduction of discounts

Responding to Competitor’s Price Changes Three possible respons to low-cost

competitors are :1. Further differentiate the product or

service2. Introduce a low-cost venture3. Reinvent as a low-cost player

SAMSUNG

SKIMMING