kotler mm14 ch14_dppt
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Kotler • KellerPhillip Kevin Lane
Marketing Management • 14e
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Developing Pricing Strategies and Programs
Chapter 14
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 3 of 33
Discussion Questions
1. How do consumers process and evaluate prices?
2. How should a company set prices initially for products or services?
3. How should a company adapt prices to meet varying circumstances and opportunities?
4. When should a company initiate a price change?
5. How should a company respond to a competitor’s price change?
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 4 of 33
Marketing Mix
PromotionPlace
Revenue Producer
Cost
Cost
Cost
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 5 of 33
Pricing
Bargaining
$31.50
$33.50
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 6 of 33
Changing Price Environment
Instant Price Comparisons
I’ll pay $235.00
Name Your Own Price
Get Products Free
Buyers
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 7 of 33
$29.99 $19.99 $24.99
Changing Price Environment
Sellers
Monitor Customers
Selective Pricing
Negotiate Prices
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 8 of 33
How Companies Price
Pricing Department
Small Business Owner
Product-line Managers (w/guidance)
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 9 of 33
Consumer Psychology and Pricing
Reference Prices
Price-Quality Inferences
Price Endings$1.99
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 10 of 33
A Black T-Shirt
Armani - $275
Gap - $14.90
H&M - $7.90
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 11 of 33
Select Final Price
Setting the Price
1
Price Method
Competitor Analysis
2
3
4
5
6
Estimate Costs
Determine Demand
Pricing Objective
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 12 of 33
Selecting the Pricing Objective
SurvivalMaximum Current ProfitMaximum Market ShareMaximum Market SkimmingProduct-Quality LeadershipOther Objectives
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 13 of 33
Determining Demand
Price sensitivityEstimating demand curvesPrice Elasticity of Demand
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 14 of 33
Figu
re
14.1 Inelastic and Elastic Demand
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 15 of 33
Estimating Costs
Demand Price Ceiling
Costs
Profit
Price
Price Floor
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 16 of 33
Estimating Costs
Fixed Costs (overhead) Variable Costs Total Costs
Types of costs
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 17 of 33
Figu
re
14.2 Costs at Varying Levels of Production
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 18 of 33
Estimating Costs
Accumulated Production
Experience Curve(Learning Curve)
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 19 of 33
Estimating Costs
Target Costing
Market research Design engineers
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 20 of 33
Figu
re
14.3 The Experience Curve
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 21 of 33
Analyzing Competitors’ Offers
“A”“B”
Worth to Customer
Costs Reaction
Price
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 22 of 33
Selecting a Pricing Method
Pricing Methods• Markup • Target-return• Perceived-Value• Value• Going-rate• Auction-type
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Figu
re
14.4
Three Cs Model for
Price Setting
Ceiling price
Customers’ assessment of unique product
features
Orienting point
Competitors’ prices and prices of substitutes
Costs
Floor Price
High Price(No possible
demand at this price)
Low Price(No possible
profit at this price)
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 24 of 33
Markup Pricing
Variable cost per toaster $10
Fixed costs $300,000
Expected unit sales 50,000
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 25 of 33
Target-Return Pricing
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 26 of 33
Figu
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14.5 Target-Return Pricing
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 27 of 33
Perceived-Value Pricing
Customer’s perceived-value
• Performance $$$• Warranty $• Customer support $• Reputation $$
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 28 of 33
Value Pricing
P1 P2C1 C2
Level of Quality
THOUSANDS OF
LOW PRICES EVERY DAYthroughout the store
EDLP
High
LowPricing
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 29 of 33
Going-Rate Pricing
Follow the Leader
Commodities
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Auction PricingEnglish auction
(ascending bids)
Dutch auction (descending bids)
Sealed-bid auction
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Selecting the Final Price
Brand Quality
Impact on others
Pricing Policies
Gain-and-risk-sharing
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Adapting the PriceGeographic Pricing
Price Discounts and Allowances
Promotional Pricing
Differentiated Pricing
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Dealing with Price Changes
Competitor Moves
Raising Prices
Cutting Prices