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Pricing Strategies

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Pricing Strategies including Market Skimming, Penetration Pricing, Economy, Premium Pricing, Bundling, Loss Leaders. Visit www.buddingmarkets.com for more information!

Pricing Strategies including Market Skimming, Penetration Pricing, Economy, Premium Pricing, Bundling, Loss Leaders. Visit www.buddingmarkets.com for more information!

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  • 1. PRICING STRATEGIES Prof. Sameer Mathur, Ph.D.
  • 2. Overview Pricing Strategies Price Adjustment Strategies © Sameer Mathur
  • 3. Price Money Charged for a Product or Service Generates Revenue Easy to Change © Sameer Mathur
  • 4. Many Names © Sameer Mathur
  • 5. Four Pricing Strategies © Sameer Mathur Low High Low High Economy Pricing Market Penetration Market Skimming Premium Pricing Price Quality
  • 6. Market Skimming Applies to new, distinctive products, early in the PLC © Sameer Mathur
  • 7. Market Skimming • Most consumer electronic products • The iPod was priced $259 in 2004. © Sameer Mathur
  • 8. Four Pricing Strategies © Sameer Mathur Low High Low High Economy Pricing Market Penetration Market Skimming Premium Pricing Price Quality
  • 9. Penetration Pricing Applies to large markets with elastic demand, economies of scale, intense competition © Sameer Mathur
  • 10. Four Pricing Strategies © Sameer Mathur Low High Low High Economy Pricing Market Penetration Market Skimming Premium Pricing Price Quality
  • 11. Economy Pricing © Sameer Mathur
  • 12. Premium Pricing © Sameer Mathur
  • 13. Two Pricing Mistakes Reducing Price Too Soon Pricing Based on Cost instead of Customer Value © Sameer Mathur
  • 14. Four Pricing Strategies © Sameer Mathur Low High Low High Economy Pricing Market Penetration Market Skimming Premium Pricing Price Quality
  • 15. Price Adjustment Strategies • Discount / allowance • Segmented • Psychological • Promotional • International © Sameer Mathur Types of discounts • Cash discount • Quantity discount • Seasonal discount Allowances • Trade-in allowances • Promotional allowances Strategies
  • 16. Quantity Discounts in Public Transport © Sameer Mathur
  • 17. Two-part Tariffs Total Price = Retail Price + Shipping Price © Sameer Mathur
  • 18. Seasonal Discounts © Sameer Mathur
  • 19. Trade-in © Sameer Mathur
  • 20. Pure Bundling © Sameer Mathur
  • 21. Mixed Bundling © Sameer Mathur
  • 22. Captive Product Pricing © Sameer Mathur
  • 23. Price Adjustment Strategies • Discount / allowance • Segmented • Psychological • Promotional • International © Sameer Mathur Types of segmented pricing strategies: • Product-line pricing • Location pricing • Time pricing Also called revenue or yield management Certain conditions must exist for segmented pricing to be effective Strategies
  • 24. Pricing a Product-Line © Sameer Mathur
  • 25. Time Pricing © Sameer Mathur
  • 26. Student Discounts in Public Transport © Sameer Mathur
  • 27. © Sameer Mathur
  • 28. Segmented Pricing Effectiveness – Market must be “Segmentable” – Segments must show different demand – Pricing must be legal – Costs of segmentation cannot exceed revenues earned – Segmented pricing must reflect real differences in customers’ perceived value © Sameer Mathur
  • 29. Price Adjustment Strategies • Discount / allowance • Segmented • Psychological • Promotional • International © Sameer Mathur The price is used to say something about the product. • Differences as small as five cents or 10 rupees can be important • Numeric digits may have symbolic and visual qualities that psychologically influence the buyer Strategies
  • 30. Psychological Pricing © Sameer Mathur
  • 31. Price Adjustment Strategies • Discount / allowance • Segmented • Psychological • Promotional • International © Sameer Mathur Temporarily pricing products below the list price or even below cost • Contracts, Special-Event pricing • Cash rebates • Low-interest financing, warranties • Loss leaders Strategies
  • 32. Promotional Pricing © Sameer Mathur
  • 33. No Promotional Pricing © Sameer Mathur
  • 34. © Sameer Mathur
  • 35. Loss Leader Sold at (or below) cost Frequently purchased product Inconveniently Located Perishable © Sameer Mathur
  • 36. Not Loss Leader – Everyday Low Pricing © Sameer Mathur
  • 37. Promotional Pricing – Challenges • Easily copied by competitors • Creates deal-prone consumers • Erode brand value • Industry Price Wars © Sameer Mathur
  • 38. Price Adjustment Strategies • Discount / allowance • Segmented • Psychological • Promotional • International © Sameer Mathur Prices charged in a specific country depend on many factors • Economic conditions • Competitive situation • Laws / regulations • Distribution system • Consumer perceptions • Corporate marketing objectives • Cost considerations Strategies
  • 39. India USA © Sameer Mathur
  • 40. Overview Pricing Strategies Price Adjustment Strategies © Sameer Mathur
  • 41. Prof. Sameer Mathur © Sameer Mathur Over 1 Million views from more than 100 countries Top 1% most viewed Over 250 presentations on Marketing www.BuddingMarkets.com