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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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    Pricing Strategy Pricing Strategy Presentation Transcript

    • Pricing Strategy
    • You can download this presentation at: http:// freepresentation.org Please visit F reePresentation. org for more presentations on marketing, strategy and case solution
    • Three Primary Consideration Price Elasticity Demographic Factors Psychological Factors
      • 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
      • 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
      • 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
    • 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
      • 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
    • Pricing Strategies Premium Pricing Economic Penetration Pricing Skimming Pricing Low High Low High Quality Price
      • 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
      • 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
    • 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
    • Thank You