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Chapter 14 - Developing Pricing Strategies and Programs Presentation Transcript

  • 1. Top 10 ConceptsChapter 14Developing Pricing Strategies and ProgramsMarketing Management 13th Ed.Kotler, Keller 2009
    SPGenius Nice Quitoriano
    September 2011
    Prof. Bong de Ungria
    http://jeannequitoriano.blogspot.com
  • 2. 10 Concepts
    Understanding Pricing
    Concept 1 - A Changing Price Environment
    Concept 2 - How Companies Price
    Concept 3 - Consumer Psychology and Pricing
    http://jeannequitoriano.blogspot.com
  • 3. 10 Concepts
    Adaptingthe Price
    Concept 4 - Geographical Pricing
    Concept 5 - Price Discount and Allowances
    Concept 6 - Promotional Pricing
    Concept 7 - Differential Pricing
    http://jeannequitoriano.blogspot.com
  • 4. 10 Concepts
    Initiating and Responding to Price Changes
    Concept 8 - Initiating Price Cuts
    Concept 9 - Initiating Price Increases
    Concept 10 - Responding to Competitors’ Price Changes
    http://jeannequitoriano.blogspot.com
  • 5. Concept 01Understanding Pricing: A Changing Pricing Environment
    Pricing practices have changed significantly in recent years.
    Internet allows sellers to discriminate between buyers and buyers to discriminate sellers
    http://jeannequitoriano.blogspot.com
  • 6. Concept 01Understanding Pricing: A Changing Pricing Environment
    Buyers can:
    Get instant price comparisons from thousands of vendors
    Exempli gratia:
    Hotel Prices
    www.tripadvisor.com
    http://jeannequitoriano.blogspot.com
  • 7. Concept 01Understanding Pricing: A Changing Pricing Environment
    Buyers can:
    Name their price and have it met.
    Exempli gratia:
    EBAY Phils.
    Auctioning
    www.ebay.ph
    http://jeannequitoriano.blogspot.com
  • 8. Concept 01Understanding Pricing: A Changing Pricing Environment
    Buyers can:
    Get products free.
    Exempli gratia:
    PHP
    www.php.com
    PHP is one of the
    popular open source
    Web Programming Languages
    http://jeannequitoriano.blogspot.com
  • 9. Concept 01Understanding Pricing: A Changing Pricing Environment
    Sellers can:
    Monitor customer behaviour and tailor offers to individuals
    Exempli gratia:
    Tiangge and
    Markets
    http://jeannequitoriano.blogspot.com
  • 10. Concept 01Understanding Pricing: A Changing Pricing Environment
    • Sellers can:
    • 11. Give certain customers access to special prices
    Exempli gratia:
    CD-King
    www.cdrking.com
    CD-R King is known as
    the bagsak-presyo unbranded gadgets store in the Philippines
    http://jeannequitoriano.blogspot.com
  • 12. Concept 01Understanding Pricing: A Changing Pricing Environment
    • Buyers and Sellers can:
    • 13. Negotiate prices in online auctions and exchanges
    Exempli gratia:
    TipidPC
    Items for Sale
    www.tipidpc.com
    Members can negotiate prices of the items being sold. Sometimes items can be swapped with other items
    http://jeannequitoriano.blogspot.com
  • 14. Concept 02Understanding Pricing: How Companies Price
    Small companies: prices are set by boss.
    Large companies: handled by division and product-line managers
    http://jeannequitoriano.blogspot.com
  • 15. Concept 03Understanding Pricing: Consumer Psychology and Pricing
    Economists assume consumers are “price takers”
    Marketers recognize consumers:
    • Actively process price info
    - Interpreting prices in terms of their knowledge from prior purchasing experience, formal communications, informal communications, online resources, or other factors.
    http://jeannequitoriano.blogspot.com
  • 16. Concept 03Understanding Pricing: Consumer Psychology and Pricing
    • Reference Prices
    • 17. Price-Quality Inferences
    • 18. Price Endings
    http://jeannequitoriano.blogspot.com
  • 19. Concept 03Understanding Pricing: Consumer Psychology and Pricing
    • Reference Prices:
    Exempli gratia:
    http://jeannequitoriano.blogspot.com
  • 20. Concept 03Understanding Pricing: Consumer Psychology and Pricing
    • Price-Quality Inference:
    Exempli gratia:
    Original Chanel Clutch= $1200
    Replica Chanel Clutch= $120
    http://jeannequitoriano.blogspot.com
  • 21. Concept 03Understanding Pricing: Consumer Psychology and Pricing
    • Price Endings:
    Exempli gratia:
    http://jeannequitoriano.blogspot.com
  • 22. Concept 04Adapting the Price: Geographical Pricing(Cash, Countertrade, Barter)
    • Barter
    • 23. Buyer and seller directly exchange goods with no money and no third party involved
    • 24. Compensation Deal
    • 25. Seller receives some percentage of the payment in cash and the rest in products
    • 26. Buyback Arrangement
    • 27. Seller sells an asset to another country and agrees to accept as partial payment products manufactured with the supplied equipment
    • 28. Offset
    • 29. Seller receives full payment in cash but agrees to spend a substantial amount of the money in that country within a stated time period
    http://jeannequitoriano.blogspot.com
  • 30. Concept 04Adapting the Price: Geographical Pricing(Cash, Countertrade, Barter)
    • Barter
    • 31. Compensation Deals
    Exempli gratia:
    TipidPC
    Items for Sale
    (www.tipidpc.com)
    http://jeannequitoriano.blogspot.com
  • 32. Concept 05Adapting the Price: Price Discounts and Allowances
    • Most companies will adjust their list price and give discounts and allowances for early payment, volume purchases, and off-season buying
    http://jeannequitoriano.blogspot.com
  • 33. Concept 05Adapting the Price: Price Discounts and Allowances
    Linksys Wireless-N Home Router
    Cash Price = PhP 1,850
    Credit Card = PhP 2,150
    Mall Sale
    http://jeannequitoriano.blogspot.com
  • 34. Concept 06Adapting the Price: Promotional Pricing
    • Several pricing techniques to stimulate early purchase:
    • 35. Loss-Leader Pricing
    http://jeannequitoriano.blogspot.com
  • 36. Concept 06Adapting the Price: Promotional Pricing
    • Several pricing techniques to stimulate early purchase:
    • 37. Special Event Pricing
    http://jeannequitoriano.blogspot.com
  • 38. Concept 06Adapting the Price: Promotional Pricing
    • Several pricing techniques to stimulate early purchase:
    • 39. Cash Rebates
    http://jeannequitoriano.blogspot.com
  • 40. Concept 06Adapting the Price: Promotional Pricing
    • Several pricing techniques to stimulate early purchase:
    • 41. Low-Interest Financing
    • 42. Longer Payment terms
    http://jeannequitoriano.blogspot.com
  • 43. Concept 06Adapting the Price: Promotional Pricing
    • Several pricing techniques to stimulate early purchase:
    • 44. Warranties and Service Contracts
    http://jeannequitoriano.blogspot.com
  • 45. Concept 06Adapting the Price: Promotional Pricing
    • Several pricing techniques to stimulate early purchase:
    • 46. Psychological Discounting
    http://jeannequitoriano.blogspot.com
  • 47. Concept 07Adapting the Price: Differentiated Pricing
    Price Discrimination
    • Occurs when a company sells a product or service at two or more prices that do not reflect a proportional difference in costs.
    http://jeannequitoriano.blogspot.com
  • 48. Concept 07Adapting the Price: Differentiated Pricing
    • In third-degree price discrimination, the seller charges different amounts to different classes of buyers
    • 49. Case 1: Customer-segment pricing
    Men = PhP40.00
    Boys = PhP35.00
    http://jeannequitoriano.blogspot.com
  • 50. Concept 07Adapting the Price: Differentiated Pricing
    • In third-degree price discrimination, the seller charges different amounts to different classes of buyers
    • 51. Case 2: Product-form
    pricing
    http://jeannequitoriano.blogspot.com
  • 52. Concept 07Adapting the Price: Differentiated Pricing
    • In third-degree price discrimination, the seller charges different amounts to different classes of buyers
    • 53. Case 3: Image Pricing
    http://jeannequitoriano.blogspot.com
  • 54. Concept 07Adapting the Price: Differentiated Pricing
    • In third-degree price discrimination, the seller charges different amounts to different classes of buyers
    • 55. Case 4: Channel Pricing
    Pork Kasim (1kg)
    Local Wet Market = PhP 160.00
    Supermarket = PhP 180.00
    http://jeannequitoriano.blogspot.com
  • 56. Concept 07Adapting the Price: Differentiated Pricing
    • In third-degree price discrimination, the seller charges different amounts to different classes of buyers
    • 57. Case 5: Location Pricing
    Dutch Metro “Thalys” Day Tour
    First Class = EUR 6.30
    Second Class = EUR 5.20
    Route : Koog-Zandijk to Schiphol
    http://jeannequitoriano.blogspot.com
  • 58. Concept 07Adapting the Price: Differentiated Pricing
    • In third-degree price discrimination, the seller charges different amounts to different classes of buyers
    • 59. Case 6: Time Pricing
    http://jeannequitoriano.blogspot.com
  • 60. Concept 08Initiating and Responding to Price Changes: Initiating Price Cuts
    Several circumstances might lead a firm to cut prices
    • Excess plant capacity
    • 61. Drive to dominate the market through lower costs
    http://jeannequitoriano.blogspot.com
  • 62. Concept 08Initiating and Responding to Price Changes: Initiating Price Cuts
    Price-Cutting strategy can lead to possible traps:
    • Low-Quality Traps
    • 63. Consumers assume quality is low
    Exempli Gratia: CDRKING’s 32” LCD TV vsAbenson’s TCL 32” LCD TV
    http://jeannequitoriano.blogspot.com
  • 64. Concept 08Initiating and Responding to Price Changes: Initiating Price Cuts
    Price-Cutting strategy can lead to possible traps:
    • Fragile-Market-Share Traps
    • 65. Low price buys market share but not market loyalty
    Exempli Gratia: MangInasalvsChicboy
    http://jeannequitoriano.blogspot.com
  • 66. Concept 08Initiating and Responding to Price Changes: Initiating Price Cuts
    Price-Cutting strategy can lead to possible traps:
    • Shallow-pockets Trap
    • 67. Higher-priced competitors match the lower prices but have longer staying power because of deeper cash reserves
    http://jeannequitoriano.blogspot.com
  • 68. Concept 08Initiating and Responding to Price Changes: Initiating Price Cuts
    Price-Cutting strategy can lead to possible traps:
    • Price-War Trap
    • 69. Competitors respond by lowering their prices even more, triggering a price war
    Exempli Gratia:
    http://jeannequitoriano.blogspot.com
  • 70. Concept 09Initiating and Responding to Price Changes: Initiating Price Increases
    Circumstances Provoking Price Increase
    Cost Inflation
    • Rising costs unmatched by productivity gains squeeze profit margins and lead companies to regular rounds of price increases
    Anticipatory Pricing
    • Companies often raise their prices by more than the cost increase, in anticipation of further inflation or government price controls
    Overdemand
    • Company raise prices when a company cannot supply all its customers
    http://jeannequitoriano.blogspot.com
  • 71. Concept 09Initiating and Responding to Price Changes: Initiating Price Increases
    Best example of the circumstances: Gas Price
    http://jeannequitoriano.blogspot.com
  • 72. Concept 10Initiating and Responding to Price Changes: Responding to Competitors’ Price Changes
    The company must consider the following:
    Product’s stage in the life cycle
    Product’s importance in the company’s portfolio
    Competitor’s intentions and resources
    http://jeannequitoriano.blogspot.com
  • 73. Concept 10Initiating and Responding to Price Changes: Responding to Competitors’ Price Changes
    The company must consider the following:
    Market’s Price and Quality Sensitivity
    Behaviour of costs with volume
    Alternative Opportunities
    http://jeannequitoriano.blogspot.com
  • 74. Top 10 ConceptsChapter 14Developing Pricing Strategies and ProgramsMarketing Management 13th Ed.Kotler, Keller 2009
    SPGenius Nice Quitoriano
    September 2011
    Prof. Bong de Ungria
    http://jeannequitoriano.blogspot.com