The Price is Right Event 1st November 2011


Published on

here is the presentation from the event today enjoy!

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • Marmite is a mass market product but with a price that is higher than those of supermarket own brands
  • The Price is Right Event 1st November 2011

    1. 1. Introduction What is Pricing?Part of your Marketing StrategyPart of your Value ChainVital to the positioning of your product or serviceA way of attracting new Business – e.g. PR, Sales Promotions, creating Word of MouthA brand building exerciseA way to maximise profits or turnover, but rarely both
    2. 2. Where To Start Pricing ObjectivesShort term or Long TermMaximise from finite product or service, orIncrease Volume overallChange Brand ValuesIndividual products and services or pricing a range Relating Pricing back to Marketing StrategyStart with new Overall strategy including price, orPricing reacting to short term Promotional CampaignReacting to Market Forces e.g. competitors, economy, buying patterns, disruptivetechnologyPosition in Product Lifecycle and New Offerings
    3. 3. The Failing of Cost Plus pricing: How to Consider costsCost Plus Pricing Doesn’t Work, it doesn’t consider:•Market Positioning•Customer’s price sensitivity•Cannibalisation of other offerings•Competitor’s prices•Economies of scale for selling higher volumesYou need to get pricing right first time or ruin your brand before you getstarted, do your research firstHowever you still must ensure you have a product or service where youcan make a profit…………If you can’t make a profit (long term) then reposition or scrap theoffering
    4. 4. Understanding The Product LifecycleBefore launching a product plan pricing and promotion for the lifeof a product.A typical Product Lifecycle: Maturity Introduction Growth Decline Change Innovation/Marketing Pricing different at every stage Innovation may boost sales and could be a product innovation or a major marketing shift
    5. 5. Some Economics Supply and Demand Supply curve shows what your competitors will sell for Demand curve shows what buyers will buy for A Supply EquilibriumPrice B Demand Quantity In reality only commodity markets can have an accurate supply and demand graph drawn This however shows the relationship between price and what quantity you can sell for most goods and services It may be useful to plot your competitors positioning
    6. 6. Understanding Price Sensitivity and Elasticity of DemandPrice Price Quantity Sold Quantity Sold Low elasticity of demand High elasticity of demandPrice Elasticity i.e. how price sensitive customers are, may depend on:•Your Unique Selling Points including: •Customer’s disposable income •Brand Values •How essential a good is •Ease of access relative to alternatives (distribution) •Availability of alternative & substitute goods •Added value and uniqueness of the tangible product •Customers’ knowledge of alternatives
    7. 7. Setting PricesPrice Sensitivity will have the biggest influence on your pricing :You know what your cost per unit is and can calculate easily profit at differentprices,You need to use research to estimate price sensitivity of your customers,The rest of your Marketing Strategy as well will influence Price SensitivityOccasionally a product will sell more at a higher price than a low priceA basic price setting strategy should put your price at the point whereyou will maximise overall profit, as long as:•you will be able to meet demand at any level, and•cost per unit will stay the same or decrease with volume
    8. 8. Researching for Pricing: Where to look what to considerCompetitorsWhat are there prices?Do they use regular sales promotions?Where would you plot them on a supply and demand graph?Are they using short term or long term pricing?Do they sell to exactly the same customers?CustomersDo they do extensive research prior to purchase (more likely in B2B)?Do they have a disposable Income?Do they consider your product or service a luxury?Are they time poor?
    9. 9. Suppliers Are their prices likely to fluctuate? Will they charge less for higher volumes? Economy Where is inflation heading? Are incomes increasing? Do customers feel confident in the economy? Looking Locally, Nationally & InternationallyYou may need to focus on the local market only, especially if customers areunlikely to travel for a product or service.Others may need to look nationally or internationally at competitors andcustomers and may need to segment markets with different pricing
    10. 10. Advanced Pricing: Pricing with extra objectives Price Skimming and CreamingPrice Sensitive CustomersNon/ Less Price Sensitive CustomersSome product or service UniquenessOpportunity to use Price SkimmingMake the maximum from less price sensitive customersMaximise profits before competitors copy an innovation or USPMay work best with a benefit for early adoptions
    11. 11. Sales Promotions and DiscountMay meet short term aims such as awareness and getting PR orgetting distributionMay be part of a strategy to make a product seem premium but ata lower price to increase volumeUsing coupons and codes maximises sales as those less pricesensitive customers won’t use them and pay full price but youaren’t pricing out those who are more price sensitive
    12. 12. Adding ValueAs well as the core and tangible product there are many ways toadd value including purely perceived valueThrough advertising and other promotion to increase brand valueMeet Emotional needs, done through brand values and potentiallyowners clubs and social media giving a sense of belonging, alsopotentially the following:•Added extras and freebies with little value but higher perceivedvalue•Product variations, limited editions and bespoke features•Customer service
    13. 13. Premium Pricing and Price Influence of BrandFor a generic product you have little choice but charging the going rate.If you can create a product with a high perceived value you sell it as a premiumproduct and the right price is vital to this.If you are otherwise lost in a market with similar competitors increasing pricemay actually increase sales as this is a major influencer to perceived valueExclusivity and where products are sold from is also important as is customerservice Perceived Cost to Core Core Value bymanufacturer Product Product Customer
    14. 14. Pricing for VolumeDoesn’t have to be an inferior good but often isSales Promotions can allow mass market sales without harming brandMay be a matter of charging the going rate of a slightly higher ratethan competitors but with some USPMay need to differentiate between customers and offer differentbrands or sub brands
    15. 15. Pricing at Launch and Penetration PricingA high price is suitable for a new and exclusive product if it isunderstoodA low price may be important for products that many won’tinstantly understand the benefits of and such a price may be analternative to advertisingA low price may be important to take market share initially thoughincreasing price again may be difficult without a USPA low price may be initially offered as a sales promotion so as notto devalue the brand and makes increasing price easyA low price or sales promotion may also help to get distributionwith retailers
    16. 16. Some other Pricing StrategiesLoss LeadersA loss leader can either get people to try your product or serviceor for retailers will get people into storesPrice DiscriminationThis strategy involves segmenting customers and selling atdifferent prices to different customers usually with a differentbrand or sub brand e.g. Tesco Value/ Tesco Finest & Volkswagen/Skoda / SeatPredatory PricingPredatory pricing usually aims to eliminate competitors from amarket and take over their market share: often used against newentrants.Dealing with Aggressive PricingIf competitors use predatory pricing against you then you couldget into a price war but may be better to create a premiumpositioning and compete on USPs other than price