Professional Documents
Culture Documents
Pricing
Veronica Mak
Is Price = Money?
Price is the amount of money charged
for a product or service, or the sum of
the values that customers exchange for
the benefits of having or using the
product or service.
4 -2
Pricing Considerations
3 Pricing Strategies
Three Pricing Strategies
1. Customer valuebased pricing
2. Competitionbased pricing
3. Cost-Based
pricing
4 -3
Competition-based pricing
4 -4
9-5
4 -5
Customer Value-Based
Pricing
Chinese character
chocolates
Good-Value Pricing
Offering the right
combination of
quality and good
service at a fair
price
Snap Fitness
4 -7
Value-Added Pricing
Attaching valueadded features
and services to
differentiate a
companys offers
while charging
higher prices
4 -8
Problems of
Customer Value-Based Pricing
What are the
challenges to a
marketer who
uses valuebased pricing?
4 -9
Cost-Based Pricing
4 - 10
4 - 11
Breakeven Pricing
What is the
Problem?
Variable cost
it fails to
consider
customer value
and the
relationship
between price
and demand.
4 - 12
Competition-Based Pricing
Setting prices
based on
competitors
strategies, prices,
costs, and market
offerings
Fast-growing clothing
boutique Hot Mama isnt
likely to win a price war
against giants like Macys or
Kohls. Instead, it relies on
personal service, a mom- and
kid-friendly atmosphere, and
its knowledgeable staff to
turn harried moms into loyal
4 - 13
External factors:
Nature of the market and demand
Other environmental factors
9 - 14
4 - 14
4 - 15
Trading in a uniform
commodity such as
wheat, copper, or
financial securities.
4 - 16
When ConAgra raised prices on its Banquet frozen dinners, sales fell
sharply. The key component . . .is youve got to be at $1, says CEO Gary
Rodkin, pictured above. Everything else pales in comparison to that.
9 - 18
4 - 18
4 - 19
Marketing at Work
When the economy
dipped, rather than
cutting everyday
prices, Whole
Foods set out to
convince shoppers
that it was, in fact,
an affordable place
to shop
4 - 20
4 - 21
4 - 22
4 - 23
Nescafe
Softwares
Razor &
blade
Woodland
Park
Wellcome
4 - 24
Price Adjustments
Reduction from the list price for buyer actions such as tradeins or promotional and sales support
1) Customer segment pricing, e.g. museums; 2) product-form
pricing, e.g. evian; 3) location-based pricing, e.g.
universities;4) time-based, e.g. cinemas
Price cutting
Adverse effects:
Create deal-prone customers
Erode a brands value
Lead to price wars
4 - 26
4 - 27
4 - 28
Non-test Part
Geographical Pricing
International Pricing
The price that a company should charge in a specific country depends
on many factors, including economic conditions, competitive situations,
laws and regulations, and development of the wholesaling and retailing
system.
Costs play an important role in setting international prices.
4 - 29
Todays Summary
Todays Summary