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Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing Strategy
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Pricing Strategy

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The presentation is about Pricing Strategy. An important concept in Marketing, it is a tool which is used for deciding what the price of the product should be and what are the factors that influnce …

The presentation is about Pricing Strategy. An important concept in Marketing, it is a tool which is used for deciding what the price of the product should be and what are the factors that influnce the price of the product, etc.

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  • This is an example of the ‘Cash Flow’ price objective. Critical Thinking Question : What is Amart trying to do with this ad? Do you think it would attract a great deal of interest? Why? Answer : Amart is trying to attract potential customers within a defined and short period of time, to clear stock and increase cash flow. Yes – it is likely that the low price per pair, coupled with the offer of 2 pairs for $80, will be highly attractive to buyers who are flexible in their purchase preferences (i.e.. not brand-loyal to competitive runners) and have funds to spend immediately. It should induce many to bring forward their purchase intentions.
  • Transcript

    • 1.
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    • 2.
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      • Understand the six major stages of the process used to establish prices.
      • Describe how marketers analyze competitive prices.
      • Breakeven analysis (Important point)
      • Discuss the bases used for setting prices.
      • Explain the different types of pricing strategies.
      • Understand how a final specific price is determined.
    • 3.
      • Price - a key element of the value proposition the company aims to deliver to customers.
      • What is value?
        • And equally important – what is the customer’s perception of value
        • Ray ban & a $20 pair of glass
      • There is a six stage process that marketers can use when setting prices.
      • These stages are not rigid steps; rather they are logical guidelines.
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    • 4. Stages for establishing prices
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    • 5.
      • Pricing objectives are goals that describe what a firm wants to achieve through pricing.
      • Form the basis for decisions about other stages of pricing.
      • Must be consistent with the firm’s overall marketing objectives.
      • Can use one or multiple objectives (which can be both short-term and long-term).
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    • 6.
      • Demand is a relationship between the price & quantity consumers are willing to buy
      • Demand analysis based on:
        • Historical data- earlier yrs
        • Estimate of sales potential
        • Estimate of price-volume relationships
        • Price elasticity-sensitivity of consumer demand to price
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    • 7.
      • Traditional demand curve slopes downwards
        • Prices rise, demand falls & vice versa
        • Prestige products unique demand curve up to a point.
          • Increasing prices may indicate increase in demand due to perceived quality, prestige and exclusivity conveyed by the price
          • Brands can be included in ‘prestige products’. They aim to differentiate & positioned appropriately can get out of the price competition.
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    • 8.
      • Some of the pricing objectives that companies might set for themselves are:
        • Survival- new or fading organisations (CST)
        • Profit
        • Return on investment
        • Market share
        • Cash flow
        • Status quo
        • Product quality
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    • 9.
      • Sales Promotion
      • Short period attractive price
      • Inducement to trial
      What is Amart trying to do with this ad? Do you think it would attract a great deal of interest? Why?
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    • 10. Pricing-Lec 22 & 23 Competitive Strategy Positioning Continuum price Unique - ness Low cost focus Differentiation focus Strategic Pricing Concerns Legal Concerns Ethical Concerns
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    • 11.
      • The importance of price depends on:
        • Type of product
        • Type of target market
        • The purchase situation
      • Value focus:
        • Combines a product’s price and quality attributes, which
        • Customers use to differentiate among competing brands.
        • Helps marketers correctly assess the target market’s evaluation of price.
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    • 12.
      • Social norms – experience combine to create the perception that the higher the price, the higher the quality
      • Marketer’s determine buyer’s attitude about the expected cost of a product
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    • 13.
      • Sources of competitors’ pricing information:
        • Comparative shoppers - persons who systematically collect data on competitors’ prices.
      • Importance of knowing competitors’ prices:
        • Helps determine how important price will be to customers.
        • Helps marketers in setting competitive or appropriate prices for their products.
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    • 14.
      • The 3 major dimensions on which prices can be based are:
        • Cost
        • Demand
        • Competition
      • The selection of the basis for pricing to use is affected by:
        • Type of product
        • Market structure of the industry
        • Brand’s market share relative to competing brands
        • Customer characteristics
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    • 15.
      • Cost-based pricing
        • Adding a dollar amount or percentage to the cost of the product.
        • Cost-plus pricing
          • Adding a specified dollar amount or percentage to the seller’s cost.
        • Markup pricing
          • Adding to the cost of the product a predetermined percentage of that cost.
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    • 16.
      • Demand-based pricing
        • Customers pay a higher price when demand for a product is strong, and a lower price when demand is weak.
        • Effectiveness depends on marketer’s ability to estimate demand accurately.
      • Competition-based pricing
        • Pricing is influenced primarily by competitors’ prices.
        • Importance increases when competing products are relatively homogeneous.
        • May necessitate frequent price adjustments.
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    • 17.
        • A pricing strategy is an approach or a course of action designed to achieve pricing and marketing objectives.
        • Differential pricing
          • Negotiated pricing – bargaining
          • Secondary-market pricing – different markets have different prices
          • Periodic discounting – temporary reduction in a pattern or systematic manner (X-Mas Sale)
          • Random discounting – unsystematic (Briscos)
        • New-product pricing
          • Price skimming – go high early.
          • Penetration pricing – go low early
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    • 18.
      • High initial price for quick ROI
      • Inelastic demand
      • Price insensitivity by the market
      Skimming Pricing Strategy Introduction Growth Maturity Decline Strategic Pricing Concerns Legal Concerns Ethical Concerns Penetration Pricing Strategy
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    • 19.
      • Low initial price with elastic demand
      • Volume for lower production costs
      • Imminent competition
      Penetration Pricing Strategy Introduction Growth Maturity Decline Strategic Pricing Concerns Ethical Concerns Skimming Pricing Strategy Legal Concerns
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    • 20.
      • GP’s fee practices
      • Raising prices for necessities in disaster areas
      • Electricity prices in winter
      Pricing-Lec 22 & 23 Strategic Pricing Concerns Legal Concerns Ethical Concerns
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    • 21.
        • Product-line pricing
          • Captive pricing – low main price with high prices for extras
          • Premium pricing – high quality demands high price
          • Bait pricing - pricing to get them in, then trade up to higher item
          • Price lining – prices for various groups of products
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    • 22.
      • After determining a pricing strategy that yields a certain price, the price may need refinement to make it consistent with pricing practices in the particular market or industry.
      • The way pricing is used in the marketing mix will affect the final price.
      • Only a recommended retail price can be quoted to resellers.
      • Pricing is a flexible and convenient way to adjust the marketing mix.
      Stage 6: Determination of a specific price
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    • 23.
      • Provide an estimate of volume (units) of sales necessary to cover total costs (or break even)
        • Conducted for a period or a project or for a marketing campaign
        • Total costs consist of fixed and variable cost
        • Fixed costs do not vary with the change in the number of units produced or sold. E.g. rent , advertising etc.
        • Variable costs vary directly with the number of units produced or sold. E.g. wages, materials, sales commission.
        • BEP is the point at which
          • the total costs (fixed plus variable) of producing a product
          • becomes equal to the total revenue made from selling the product.
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    • 24.
        • Break-even volume = fixed cost / (price – variable cost)
      Figure: Break-Even Chart for Determining Target-Return Price and Break-Even Volume Variable cost Below this point total cost is more than total income Above this point total income is more than total cost
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    • 25.
      • BEP (in units) = Fixed costs
      • Price - variable costs
      • Price per unit =$100
      • AVC = $60
      • Fixed costs =$120000 $ 120,000
      • $40
      • BEP = 3000 units.
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    • 26.
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      • About the Company: HelpWithAssignment.com is an online tutoring company. Our network spans 3 continents and several countries.
      • We offer three kinds of services: Assignment Help, Thesis Help and Online Tuitions for students in their college or University.
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