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Chapter 10

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  • 1. CHAPTER 10 DISCUSSION QUESTIONS1) State & summarize the 3 forces of pricing.2) Explain what customized or dynamic pricing is.3) Explain the 3 objectives for establishing a new productsprice.4) Explain the 3 basic strategies for establishing a newproducts price.
  • 2. 3 FORCES OF PRICING1)PRICE CONVEYS IMAGE2)COMPETITION & PRICING3)FOCUS ON VALUE
  • 3. 1) PRICE CONVEYS IMAGE-CUSTOMERS LOOK AT PRICES TO DETERMINE WHAT TYPE OF BUSINESS THEYARE DEALING WITH.-HIGH PRICES CONVEY:1) QUALITY2) PRESTIGE3) UNIQUENESS-ONLY 15-35% OF CUSTOMERS CONSIDER PRICE TO BE THE CHIEF CRITERIONWHEN SELECTING A PRODUCT/SERVICE.-CUSTOMERS ARE WILLING TO PAY FOR:1) EXTRA VALUE2) CONVENIENCE3) SERVICE4) QUALITY
  • 4. A WELL CHOSEN PRICE SHOULD DO 3 THINGS1) ACHIEVE THE FINANCIAL GOALS OF THE COMPANY.-WILL THE PRICE LEAD TO PROFITABILITY?2) FIT THE REALITIES OF THE MARKETPLACE.-WILL CUSTOMERS BY AT THAT PRICE?3) SUPPORT A PRODUCT’S POSITIONING.-IS THE PRICE CONSISTENT WITH THE BRAND?
  • 5. 2) COMPETITION & PRICINGTWO FACTORS WHEN TAKING COMPETITION INTOACCOUNT FOR A PRICING STRATEGY1) THE LOCATION OF THE COMPETITORS.2) THE NATURE OF THE COMPETING GOODS & SERVICES.
  • 6. 3) FOCUS ON VALUE-THE “RIGHT” PRICE FOR A PRODUCT/SERVICE DEPENDSON 1 FACTOR:-THE VALUE THAT IT PROVIDES FOR A CUSTOMER.-2 ASPECTS OF VALUE:1) OBJECTIVE VALUE-THE PRICE CUSTOMERS WOULD BE WILLING TOPAY IF THEY UNERSTOOD PERFECTLY THEBENEFITS THAT A PRODUCT/SERVICE DELIVERSFOR THEM.2) PERCEIVED VALUE-THE CUSTOMER’S OPINION OF APRODUCT’S/SERVICE’S VALUE TO HIM/HERCOMPARED TO PRICE.
  • 7. INTRODUCING A NEW PRODUCTTHE 3 OBJECTIVES THAT SHOULD BE SATISFIEDWHEN PRICING ANY NEW PRODUCT.1)GETTING THE PRODUCT ACCEPTED2)2) MAINTAINING MARKET SHARE AS COMPETITION GROWS3)3) EARNING A PROFIT
  • 8. 1) GETTING THE PRODUCT ACCEPTED-NO MATTER HOW UNUSUAL A PRODUCT IS, ITS PRICE MUST BEACCEPTABLE TO A COMPANY’S POTENTIAL CUSTOMERS.-THE ACCEPTABLE PRICE RANGE FOR A NEW PRODUCT DEPENDSON THE PRODUCT’S POSITION.1) REVOLUTIONARY PRODUCTS-PRODUCTS ARE SO NEW & UNIQUE THAT THEYTRANSFORM EXISTING MARKETS. THE PRICE RANGETENDS TO BE WIDE.2) EVOLUTIONARY PRODUCTS-PRODUCTS THAT OFFER UPGRADES & ENHANCEMENTS TOEXISTING PRODUCTS. PRICE RANGE IS NOT AS WIDE ASREVOLUTIONARY PRODUCTS.3) ME-TOO PRODUCTS-PRODUCTS THAT OFFER THE SAME BASIC FEATURES ASEXISTING PRODUCTS ON THE MARKET. PRICE RANGE ISNARROW.
  • 9. REVOLUTIONARY PRODUCTS
  • 10. EVOLUTIONARY PRODUCTS
  • 11. ME-TOO PRODUCTS