PRICING STRATEGY

Pertimbangan Penetapan HargaPricing ObjectivePrice as Indicator of ValueProce Elasticity of DemandProduct Line PricingEstimating the Profit Impact from Price Change

Pricing ObjectiveProfitBrand ImageCustomer ValueROIPrice Stability

Conceptual Orientation to PricingDemand for a products and service sets the price ceiling.Cost, particularly direct (variable) costs determine price floor.Consumer value perception and buyer price sensitivity will determine the maximum price that can be charged.Regulation prohibiting predatory pricing, the level of differentiation among competitive offerings, and the financial goals set by the organization are all factor that may affect the price range within broad demand and cost boundaries.

Value PricingValue = Perceived Benefits/ PriceValue is not just price, but is liked to performance and meeting expectations of consumers (P & G).For some products, price alone influences consumers perception of quality.Price also affects consumers perception of prestige.A judgment by a consumer as to the wprth and desirebility of a product and service relative to substitutes tahat satisfy the same needA consumers comparison of the costs and benefitsof substitute items gives rise to a refernt value.

Price Elasticity of DemandA number of factors influence the price elasticity of demand for a product or service:The more substitute a product or service has, the greater its price elasticity.The more uses a product or service has, the greater its price elasticityThe higher ratio of the price of the product orservice to the income of buyer, the greater its price elasticity

Product Line PricingA negative cross elasticity coefficient indicates that the products are compelementary.A positive cross elasticity coefficient indicates that the products are substitutesHow to maximize revenue for the entire line.Product line pricing involve determining: the lowest priced product, the higest-priced product, price differential for all other product in the line.Price differential should get larger as one moves up the product line to more expensive items.

Profit Impact from Price ChangesPercentage change in unit volume to break even on a price change Percentage price changeOriginal contribution marginPercentage price change

Pricing StrategiesFull Costinga. Mark-up pricingb. BEP Pricingc. Rate of ReturnVariable Costing

Variable Cost PricingIn short run pricing situations, the relevan costs to consider are the variable costs, not the total cost.Variable unit cost represents the minimum selling price at with the product or servvice can be marketed.Variable-cost pricing is a form of demand oriented pricing.

Variable Cost PricingIt can serve two different purpose:a. Stimulate demandVariable cost prices are lower than full cost prices, the assumption is that they will stimulate demand and increase revenue, and hence lead to economies of scale, lower unit cost, and greater profits.b. Shift demand from one time periode to another

New Offering Pricing StrategiesSkimming pricingPenetration pricing

Skimming Pricing StrategyDemand is likely to be price inelasticThere are different price-market segment, thereby appealing first to buyers who have a higher range of acceptable price.The offering is unique enough to be protected from competition.A capacity constraint in producing the product or providing the service exists.An organization wants to generate funds quickly to recover its investment or finance other development effortsThere is a realistic perceived value in the product or service.

Penetration Pricing StrategyDemand is likely to be price elastic.The offering si not unique or protected by patens, copyright, or tarde secrets.Competitors are expected to enter the market quickly.There are no distinc and separate price-market segmentsThere is apossibility of large savings in production and marketing cost by incerasing sales.Company objective is to obtain a large market share.

Pricing and Competitive InteractionResearch and practice suggest that marketing managers infrequently look beyond an initial pricing decision to consider competitor countermoves, their own subsequent moves, and outcomes.Two remedies are often propose to overcome this nearsightedness. First, managers are advised to focus less on short-term outcomes and attend more to longer term consequnces of actions.

Pricing and Competitive InteractionSecond, managers are advised to step into the shoes of rival managers or companies and answer a number of questions.1. What are competitor goals and objectives? How are they different from our goals and objectives.2. What assumptions has the competitor made about itself, our company and offering, and the marketplace? Are these assumptions different from ours?3. What strength does the competitor believe it has and what are its weaknesses? What might competitor believe about our atrengths and weaknesses to be.