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Pricing Strategy

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This following presentation defines Pricing Strategy; A Cost-Based Price Strategy, price set up by calculate production cost, promotion cost, and overhead cost, then adding the desired profit to those …

This following presentation defines Pricing Strategy; A Cost-Based Price Strategy, price set up by calculate production cost, promotion cost, and overhead cost, then adding the desired profit to those calculation. A Demand-Based Price Strategy, price set up after analyzing consumer desires and determines the range of prices acceptable to the target market. A Competition-Based Price Strategy, the marketer sets prices in accordance with competitors.

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  • 1. Pricing Strategy
  • 2. You can download this presentation at: http:// freepresentation.org Please visit F reePresentation. org for more presentations on marketing, strategy and case solution
  • 3. Three Primary Consideration Price Elasticity Demographic Factors Psychological Factors
  • 4.
    • Number of potential buyers, and their age, education, and gender.
    • Location of potential buyers
    • Position of potential buyers
    • Expected consumption rates of potential buyers
    • Economic strength of potential buyers
    Demographic Factors
  • 5.
    • Related to pricing concern primarily how consumers will perceive various prices or price changes.
        • Will potential buyers use price as an indicator of product quality?
        • Will potential buyers be favorably attracted by odd pricing?
        • Will potential buyers perceive the price as too high relative to the service the product gives them?
        • Are potential buyers prestige oriented and therefore willing to pay higher prices to fulfill this needs?
        • How much will potential buyers be willing o pay for the product?
    Psychological Factors
  • 6.
    • Both demographic and psychological factors affect price elasticity. Price elasticity is a measure of consumers’ price elasticity:
    • e= % in demand / % in price
    • Although difficult to measure, there are two basic methods commonly used to estimate price elasticity.
      • Estimated from historical data or from price/quantity data across different sales district.
      • Estimated by sampling a group of consumers from the target market and polling them concerning various price/quantity relationship.
    Price Elasticity
  • 7. Pricing Objectives Pricing to achieve a target return on investment Stabilization of price and margin Pricing to achieve a target market share Pricing to meet or prevent competition
  • 8.
    • Number of competitors
    • Size of competitors
    • Location of competitors
    • Condition of entry into the industry
    • Degree of vertical integration of competitors
    • Number of products sold by competitors
    • Cost structure of competitors
    • Historical reaction of competitors to prices changes
    Pricing Set Up Consideration
  • 9. Pricing Strategies Premium Pricing Economic Penetration Pricing Skimming Pricing Low High Low High Quality Price
  • 10.
    • Economic
      • Low price  low quality
    • Penetration Pricing
      • Offer low price to gain market share, usually in fast moving consumers good
    • Skimming Pricing
      • During introduction of products or because the limit of distributions channel
    • Premium Pricing
      • Branded product, prestige product  high quality and high price
    Pricing Strategies
  • 11.
    • A Cost-Based Price Strategy
      • Price set up by calculate production cost, promotion cost, and overhead cost, then adding the desired profit to those calculation.
    • A Demand-Based Price Strategy
      • Price set up after analyzing consumer desires and determines the range of prices acceptable to the target market.
    • A Competition-Based Price Strategy
      • The marketer sets prices in accordance with competitors.
    Pricing Strategies
  • 12. A General Pricing Model Set price objectives Evaluate product- price relationship Set initial price structure Analyze profit potential Estimate costs and other price limitation Change price as needed
  • 13. Thank You