Untuk pelajar-pelajar NMIT di EDUCITY yang mengambil sabjek ini pada Jan 2015

1. MGT 2306
MARKETING MANAGEMENT
Lesson 7B

2. LESSON 7B OBJECTIVES
• Define what price is
• Describe the different types of pricing strategies
• Describe the different types of price adjustment
strategies

3. WHAT IS PRICE? (HARGA)
• the amount charged for a product or service or the
sum of values consumers exchange for the
benefits of having or using the product or service

4. THE MANY NAMES OF “PRICE”
Rent (Sewa)
Fee (Yuran)
Rate (kadar)
Commission (dalal)
Fare (tambang)
Toll (tol)
• Bribe (rasuah)
• Salary (gaji)
• Wage (upah)
• Interest (faedah)
• Tax (cukai)

5. Characteristics of price
• The only element to produce revenues (satu-
satunya yang boleh mendatangkan pendapatan)
• Most flexible (luwes) element
• Can be changed quickly (senang ubah)
• You may start a price competition with it (boleh
mula perang harga di pasaran)
• You may also make common mistakes using it

6. PRICING STRATEGIES
NEW & INNOVATIVE
PRODUCTS
• Penetration Pricing
• Skimming Pricing
IMITATIVE PRODUCTS
• Matrix Pricing
(according to quality)
OTHER PRICING
STRATEGIES
• Product line pricing
• Optional-Product pricing
• Captive-product pricing
• By-product pricing
• Bundle pricing
• Competition pricing
• Premium pricing
• Cost-based pricing

7. PENETRATION PRICING
• The organisation sets
a low price to increase
sales and market
share.
• Once market share
has been captured the
firm may well then
increase their price.

8. SKIMMING PRICING
• The organisation sets
an initial high price
and then slowly
lowers the price to
make the product
available to a wider
market.
• The objective is to
skim profits of the
market layer by layer.

9. IMITATIVE (‘ME TOO’) PRODUCTS
quality (high - medium - low)
price (high - medium - low)
Matrix – 9 strategies
for example
high price, high quality (premium strategy)
low price, medium quality (good value strategy)
low price, low quality (economy strategy)

10. EXAMPLE
Low price, low quality Medium Price, Medium quality

11. PRODUCT LINE PRICING
• Pricing different products within the same product
range at different price points.
Example:
Samsung offering different smartphones with
different features at different prices. The greater the
features and the benefit obtained the greater the
consumer will pay. This form of price discrimination
assists the company in maximising turnover and
profits.

12. OPTIONAL PRICING
• The organisation sells optional
extras along with the product to
maximise its turnover.
Example:
Tune Hotel, Dominos Pizza. You
pay for a standard pizza but if you
order additional cheese toppings,
cheese sticks or pepsi, you have
to pay more.

13. CAPTIVE PRICING
• Pricing products that must be used with the main
product. High margins are often most set for supplies.
Example:
Canon sells an ink jet printer for only RM148, but an ink
cartridge costs a whopping RM91. Customers have no
choice but to buy the ink cartridge when they run out of
it.

14. BY-PRODUCT PRICING
• Pricing low-value products to get rid of them
- example : Free samples sold separately
- Premiums of obsolete items

15. BUNDLE PRICING
• The organisation bundles a group
of products at a reduced price.
Common methods are buy one
and get one free promotions
(BOGOF).
Example:
This strategy is very popular with
supermarkets who often offer
BOGOF strategies.

16. COMPETITION PRICING
• Setting a price in
comparison with
competitors. A company
has three options and
these are to price lower,
price the same or price
higher.
Example:
Some firms offer a price
matching what their
competitors are offering.

17. PREMIUM PRICING
The price set is high to
reflect the exclusiveness
of the product.
Example:
iPhone, First Class
services, Porsche,
Gucci, Starbucks, Resort
Hotels

18. COST BASED PRICING
• The firms takes into account the cost of
production and distribution, they then decide
on a mark up which they would like for profit
to come to their final pricing decision.
Example:
If a piece of curry-puff costs them RM0.20 and
they want to make a profit of RM0.10, then they
will sell the curry puff for RM0.30

19. PRICE ADJUSTMENT STRATEGIES
• They refer to all strategies which are applied by an
organization that take into consideration the
differences amongst customers and the rapidly
changing environment. They are:-
• Discounts and allowances
• Segmented pricing
• Psychological pricing
• Promotional pricing
• Geographic pricing
• International pricing

20. DISCOUNTS AND ALLOWANCES
Reduction to the list price for:
Cash discount – payment by cash or early payment
Quantity discount - larger quantity purchased
Seasonal discount - purchasing out of season
Functional discount - performing a function (ie
returns or delivery)
Promotional allowance – paid by the manufacturer
when a retailer helps advertise and promote the
manufacturer’s product

21. SEGMENTED PRICING
Adjust price based on differences in:-
customer group (locals, foreigners)
product form (bottle, soft-pack)
place – city, town, “kampung”
Time (evening, weekends, festive seasons)

22. The seller here will consider the psychology of
price and the positioning of price within the market
place.
Example:
The seller charges 99 sen instead of RM1 or
RM199 instead of RM200. Buyers will still say they
purchased their product under RM200, even
thought it was a ringgit away.
Psychological Pricing

23. PROMOTIONAL PRICING
temporary price reductions to increase sales
loss leader
special event pricing
mark downs to clear obsolete stock
• cash rebates
• interest free credit

24. GEOGRAPHICAL PRICING
FOB - free on board
Company pays freight
Uniform delivered pricing
same freight charged to all locations
Zone pricing
freight cost varies across zones
International pricing
pricing reflects conditions and expectations in different
world markets

25. INTERNATIONAL PRICING
• Prices charged in a specific country depend on many factors:
Economic conditions (keadaan ekonomi)
Competitive situation (peringkat persaingan)
Laws/regulations (rang undang-undang)
Distribution system (pengagihan)
Consumer perceptions
Cost considerations

26. A PLATE OF ‘MEE GORENG’ KOSONG
Indonesia :
3000 Rupiah
HongKong:
HK$15
Singapore :
S$4.00
Malaysia :
RM4.00
Japan:
¥700
USA:
US$6.00
RM6
RM10
RM1.2
5 RM20
RM21