Variations of brands for different price points
MARIOTT HOTELS
Steps in Setting a Pricing Policy
Step 1:Selecting The Pricing Objective
SurvivalMaximum Current
ProfitMaximum Market
ShareMaximum Market
Skimming
Product Quality Leadership
Step 2:Determining Demand
Price SensitivityPrice Elasticity
Estimating Demand CurvesSurveys
Price ExperimentsStatistical Analysis
Accumulated Production -decline with the average cost
Target Costing -concentrated effort by engineers & designers to achieve a particular reduced cost
Step 4:Analyzing Competitor’s Costs, Prices,& Offers
Anticipating Competitor’s reactions -Assuming standard way to a price change -Considering each change a fresh-new challenge
Step 5:Selecting a Pricing method
Markup pricingTarget-return pricingPerceived Value Pricing
Value Pricing
Winning Customers by charging a
fairly low price for a high-quality
offering
Going-rate Pricing
Auction-type Pricing English auctions (ascending bids) Dutch auctions(descending bids) Sealed-bid auctions
Step 6:Selecting The Final Price
Gain & Risk Sharing pricingImpact of Price on other parties
Created by Subhasis Panda, IIT Bombay, during an internship by Prof.Sameer Mathur, IIM Lucknowwww.IIMInternship.com