Top 10 ConceptsChapter 14Developing Pricing Strategies and ProgramsMarketing Management 13th Ed.Kotler, Keller 2009<br />S...
10 Concepts<br />Understanding Pricing<br />Concept 1 - A Changing Price Environment<br />Concept 2 - How Companies Price<...
10 Concepts<br />Adaptingthe Price<br />Concept 4 - Geographical Pricing<br />Concept 5 - Price Discount and Allowances<br...
10 Concepts<br />Initiating and Responding to Price Changes<br />Concept 8 - Initiating Price Cuts<br />Concept 9 - Initia...
Concept 01Understanding Pricing: A Changing Pricing Environment<br />Pricing practices have changed significantly in recen...
Concept 01Understanding Pricing: A Changing Pricing Environment<br />Buyers can:<br />Get instant price comparisons from t...
Concept 01Understanding Pricing: A Changing Pricing Environment<br />Buyers can:<br />Name their price and have it met.<br...
Concept 01Understanding Pricing: A Changing Pricing Environment<br />Buyers can:<br />Get products free.<br />Exempli grat...
Concept 01Understanding Pricing: A Changing Pricing Environment<br />Sellers can:<br />Monitor customer behaviour and tail...
Concept 01Understanding Pricing: A Changing Pricing Environment<br /><ul><li>Sellers can:
Give certain customers access to special prices</li></ul>Exempli gratia:<br />CD-King<br />www.cdrking.com<br />CD-R King ...
Concept 01Understanding Pricing: A Changing Pricing Environment<br /><ul><li>Buyers and Sellers can:
Negotiate prices in online auctions and exchanges</li></ul>Exempli gratia:<br />TipidPC<br />Items for Sale<br />www.tipid...
Concept 02Understanding Pricing: How Companies Price<br />Small companies: prices are set by boss.<br />Large companies: h...
Concept 03Understanding Pricing: Consumer Psychology and Pricing<br />Economists assume consumers are “price takers”<br />...
Concept 03Understanding Pricing: Consumer Psychology and Pricing<br /><ul><li>Reference Prices
Price-Quality Inferences
Price Endings</li></ul>http://jeannequitoriano.blogspot.com<br />
Concept 03Understanding Pricing: Consumer Psychology and Pricing<br /><ul><li>Reference Prices:</li></ul>Exempli gratia:<b...
Concept 03Understanding Pricing: Consumer Psychology and Pricing<br /><ul><li>Price-Quality Inference:</li></ul>Exempli gr...
Concept 03Understanding Pricing: Consumer Psychology and Pricing<br /><ul><li>Price Endings:</li></ul>Exempli gratia:<br /...
Concept 04Adapting the Price: Geographical Pricing(Cash, Countertrade, Barter)<br /><ul><li>Barter
Buyer and seller directly exchange goods with no money and no third party involved
Compensation Deal
Seller receives some percentage of the payment in cash and the rest in products
Buyback Arrangement
Seller sells an asset to another country and agrees to accept as partial payment products manufactured with the supplied e...
Offset
Seller receives full payment in cash but agrees to spend a substantial amount of the money in that country within a stated...
Concept 04Adapting the Price: Geographical Pricing(Cash, Countertrade, Barter)<br /><ul><li>Barter
Compensation Deals</li></ul>Exempli gratia:<br />TipidPC <br />Items for Sale<br />(www.tipidpc.com)<br />http://jeannequi...
Concept 05Adapting the Price: Price Discounts and Allowances<br /><ul><li>Most companies will adjust their list price and ...
Concept 05Adapting the Price: Price Discounts and Allowances<br />Linksys  Wireless-N Home Router <br />	Cash Price = PhP ...
Concept 06Adapting the Price: Promotional Pricing<br /><ul><li>Several pricing techniques to stimulate early purchase:
Loss-Leader Pricing</li></ul>http://jeannequitoriano.blogspot.com<br />
Concept 06Adapting the Price: Promotional Pricing<br /><ul><li>Several pricing techniques to stimulate early purchase:
Special Event Pricing</li></ul>http://jeannequitoriano.blogspot.com<br />
Concept 06Adapting the Price: Promotional Pricing<br /><ul><li>Several pricing techniques to stimulate early purchase:
Cash Rebates</li></ul>http://jeannequitoriano.blogspot.com<br />
Concept 06Adapting the Price: Promotional Pricing<br /><ul><li>Several pricing techniques to stimulate early purchase:
Low-Interest Financing
Longer Payment terms</li></ul>http://jeannequitoriano.blogspot.com<br />
Concept 06Adapting the Price: Promotional Pricing<br /><ul><li>Several pricing techniques to stimulate early purchase:
Warranties and Service Contracts</li></ul>http://jeannequitoriano.blogspot.com<br />
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Chapter 14 - Developing Pricing Strategies and Programs

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Transcript of "Chapter 14 - Developing Pricing Strategies and Programs"

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

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