Top 10 Concepts of Chapter 14

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Top 10 Concepts of Chapter 14

  1. 1. TOP 2 Learning Concepts Ch 14: Developing Pricing Strategies and Programs<br />Bohong Li<br />April 1 ,2011<br />
  2. 2. Outline<br />First Step in Setting Price<br />Last Price-Adaptation Strategy<br />
  3. 3. Steps in Setting Price<br />Select the price objective<br />Determine demand<br />Estimate costs<br />Analyze competitor price mix<br />Select pricing method<br />Select final price<br />
  4. 4. Step 1: Selecting the Pricing Objective<br />Survival<br />Maximum current profit<br />Maximum market share<br />Maximum market skimming<br />Product-quality leadership<br />
  5. 5. Selecting the pricing objective<br />Survival:if the companies are plagued with overcapacity, intense competition, or changing consumer wants.<br />Maximum current profit: if the companies estimate the demand and costs associated with alternative prices<br />Maximum market share: if they believe that a higher sales volume will lead to lower unites costs and higher long-run profit.<br />
  6. 6. Setting the price objective<br />Maximum market skimming: companies unveiling a new technology favor setting high prices, and slowly drop price over time.<br />Product-quality leadership: products or services characterized by high levels of perceived quality, taste, and status with a price just high enough not to be out of consumers’ reach.<br />
  7. 7. Maximum market skimming<br />Under the following conditions: <br />(1) A sufficient number of buyers have a high current demand; <br />(2) the unit cost of producing a small volume are not so high that they cancel the advantage of charging what the traffic will bear;<br />
  8. 8. Maximum market skimming<br />(3) the high initial price does not attract more competitors to the market; <br />(4) the high price communicates the image of a superior product. <br />
  9. 9. An example of Maximum market skimming<br />When Sony introduced the world’s first high-definition television (HDTV) to the Japanese market in 1990, it was priced at $43,000. Then the price dropped steadily through the years—a 28-inch Sony HDTV cost just over $6,000 in 1993 and a 40-inch Sony HDTV about $1,200 in 2007. <br />
  10. 10. Price-Adaptation Strategies<br />Geographical Pricing<br />Discount/Allowances<br />Promotional Pricing<br />Differentiated Pricing<br />
  11. 11. Differentiated pricing<br />Customer-segment pricing <br />Product-form pricing<br />Channel pricing <br />Location Pricing<br />Image pricing<br />Time pricing<br />
  12. 12. Differentiated pricing<br />
  13. 13. Differentiated pricing<br />
  14. 14. Summary<br />Steps in Setting Price<br />Select the price objective<br />Determine demand<br />Estimate costs<br />Analyze competitor price mix<br />Select pricing method<br />Select final price<br />
  15. 15. Summary<br />Selecting the Pricing Objective<br />Survival<br />Maximum current profit<br />Maximum market share<br />Maximum market skimming<br />Product-quality leadership<br />
  16. 16. Summary<br />Price-Adaptation Strategies<br />Geographical Pricing<br />Discount/Allowances<br />Promotional Pricing<br />Differentiated Pricing<br />
  17. 17. Summary<br />Differentiated pricing<br />Customer-segment pricing <br />Product-form pricing<br />Channel pricing <br />Location Pricing<br />Image pricing<br />Time pricing<br />
  18. 18. TOP 2 Learning Concepts Ch 14: Developing Pricing Strategies and Programs<br />Bohong Li<br />April 1 ,2011<br />

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