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Pricing bookbooming

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  • 1. PRICING
  • 2. Questions to answer1. What is the price you pay for your apartment?-rent2. What is the price you pay for your education?-tuition3. What is the price you pay to your doctor or dentist?-a fee4. What is the price you pay to the airline, taxi and bus companies?-a fare5. What is the price you pay for the local services?-a rate
  • 3. Questions to answer6.What is the price you pay for the money you borrow?-charges and interest7. What is the price you pay for driving your car on a motorway?-a toll. What is the price you pay to the company that insures you?-premium9. What is the price you pay to the guest speaker?-an honorarium10. What is the price paid to the government official to help some character steal?
  • 4. Questions to answer8-a bribe11. What is the price collected by the trade union?-dues12. What is the price you pay to your regular lawyer to cover his/her services?-a retainer13. What is the price of an executive?-a salary14. What is the price of a salesperson?-a commission15. What is the price of a worker?-a wage
  • 5. The role and perception of price  Price is the value that is placed on something.  Price is any common currency of value to both buyer and seller.  Price directly generates the revenues, serves as a communicator, a bargaining tool and a competitive weapon.
  • 6. The customer’s perspective Price represents the value they attach to whatever is being exchanged. In assessing price, the customer is looking specifically at the expected benefits of the products:
  • 7. FunctionalPersonal Quality Price assessment Financial Operational
  • 8. The seller’s perspective Profit = Total revenue – Total cost Total revenue = Quantity sold * Unit price Total cost = Production cost + Marketing cost + Selling cost
  • 9. Psychological effects of price Low price = negative statement about the product’s quality. A sudden reduction in price of an established product = quality has been compromised. High price might actually attract customers.
  • 10. External influences on pricing 1. Customers and consumers 2. Demand and price elasticity 3. Channels of distribution 4. Competitors 5. Legal and regulatory framework
  • 11. External influences on pricing1. Customers and consumers What the market will tolerate The bigger the area, the more discretion the marketer has in COSTS setting price.
  • 12. External influences on pricing2. Demand and price elasticity Demand determinants  Changing consumer taste and needs  Recession  Competitors’ products and price Price elasticity of demand  Sales respond to price variations: elastic.  Sales stable after price change: inelastic.
  • 13. External influences on pricing3. Channels of distribution
  • 14. External influences on pricing4. Competitors: Monopoly: only 1 supplier - rare Oligopoly: a small number of powerful providers dominate the market. Monopolistic competition: competitors, each with differentiated product. Perfect competition: competitors, each with products undistinguishable - rare
  • 15. External influences on pricing5. Legal and regulatory framework: Watchdog bodies
  • 16. Internal influences on pricing1. Organisational objectives2. Marketing objectives3. Costs
  • 17. Internal influences on pricing1. Organisational objectives Corporate strategy: target volume sales, target value sales, target growth, target profit figures Market leader or niche New entrant or established Can be both short-term and long-term
  • 18. Internal influences on pricing2. Marketing objectives Focus on specific target markets and the position desired with them. Depends on product’s life cycle:  Intro. stage: lower price - invite trial  Growth & early maturity: raise price  Late maturity & decline: price reduction
  • 19. Internal influences on pricing3. Costs Total costs include:  Operating and  Servicing costs A product’s selling price generally represents:  Its total cost (unit cost plus overheads), &  Profit or “risk reward”
  • 20. The process of price settingPricing Demand Pricing policies Setting the Pricing tacticsobjectives assessment & strategies price range & adjustments
  • 21. 1. Pricing objectives Financial objectives: short/long-term Sales and marketing objectives  Market share and positioning  Volume sales  Status quo: preserve the status quo – happy with current situation  Price war (undercutting), price matching, improve product / service / communication Survival
  • 22. 2. Demand assessment Marketers need to assess demand levels for a product at any given price. This involves a great deal of managerial skills as there are many variables.
  • 23. 3. Pricing policies and strategies New product pricing strategies  Price skimming: high price, then lower  Penetration pricing: low price, then high up Product mix pricing strategies:  A product range starts with basic products, then price steps up with additional features Managing price changes:  Price are not static because of competitive pressure, Cost inflation, new opportunities
  • 24. 4. Setting the price range  The cost-volume-profit relationship  Fixed costs  Variable costs  Marginal costs  Total costs  Setting the price range  Cost-based method  Demand-based method  Competition-based method
  • 25. The cost-volume-profitrelationship Fixed costs: do not vary with output in the short term (salaries, rent, etc.) Variable costs: vary according to the quantity produced (raw materials, etc.) Marginal costs: change that occurs to total cost if 1 more unit is added Total costs: all the cost incurred Breakeven analysis: the point at which total revenue = total cost
  • 26. A. Cost-based methods Mark-up price = costs + profit (giá cộng lời vào vốn) Cost-plus pricing = costs + fix % (định giá có lãi) Experience curve pricing (định giá theo đường cong kinh nghiệm)
  • 27. B. Demand-based pricing When demand is strong, the price goes up; when it is weak, the price goes down. Need a good understanding of the nature and elasticity of demand. Psychological pricing: customer-based  Rely on the consumer’s emotive responses, subjective assessments and feelings.  Applicable to higher involvement products.
  • 28. C. Competition-based pricing Depends on:  The structure of the market  The product’s perceived value in the market Can be:  Cost-leader with price-oriented approach  Price-follower bases on the going-rate for the product
  • 29. 5. Pricing tactics and adjustments  Price can vary to reflect specific customer needs, the market position.  Marketers should set up a framework for pricing discretion.  Special adjustments can be made for short-term promotional purposes  Discounts, allowances, trade-in  Zoned pricing: single, multiple zones
  • 30. Thank you very much!!!