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Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
Chapter 14 -  Developing Pricing Strategies and Programs
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Chapter 14 - Developing Pricing Strategies and Programs

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  • 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. 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. 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. 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. 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. 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. 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. 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. 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. Concept 01Understanding Pricing: A Changing Pricing Environment<br /><ul><li>Sellers can:
  • 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. Concept 01Understanding Pricing: A Changing Pricing Environment<br /><ul><li>Buyers and Sellers can:
  • 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. 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. 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. Concept 03Understanding Pricing: Consumer Psychology and Pricing<br /><ul><li>Reference Prices
  • 17. Price-Quality Inferences
  • 18. Price Endings</li></ul>http://jeannequitoriano.blogspot.com<br />
  • 19. Concept 03Understanding Pricing: Consumer Psychology and Pricing<br /><ul><li>Reference Prices:</li></ul>Exempli gratia:<br />http://jeannequitoriano.blogspot.com<br />
  • 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. Concept 03Understanding Pricing: Consumer Psychology and Pricing<br /><ul><li>Price Endings:</li></ul>Exempli gratia:<br />http://jeannequitoriano.blogspot.com<br />
  • 22. Concept 04Adapting the Price: Geographical Pricing(Cash, Countertrade, Barter)<br /><ul><li>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</li></ul>http://jeannequitoriano.blogspot.com<br />
  • 30. Concept 04Adapting the Price: Geographical Pricing(Cash, Countertrade, Barter)<br /><ul><li>Barter
  • 31. Compensation Deals</li></ul>Exempli gratia:<br />TipidPC <br />Items for Sale<br />(www.tipidpc.com)<br />http://jeannequitoriano.blogspot.com<br />
  • 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. 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. Concept 06Adapting the Price: Promotional Pricing<br /><ul><li>Several pricing techniques to stimulate early purchase:
  • 35. Loss-Leader Pricing</li></ul>http://jeannequitoriano.blogspot.com<br />
  • 36. Concept 06Adapting the Price: Promotional Pricing<br /><ul><li>Several pricing techniques to stimulate early purchase:
  • 37. Special Event Pricing</li></ul>http://jeannequitoriano.blogspot.com<br />
  • 38. Concept 06Adapting the Price: Promotional Pricing<br /><ul><li>Several pricing techniques to stimulate early purchase:
  • 39. Cash Rebates</li></ul>http://jeannequitoriano.blogspot.com<br />
  • 40. Concept 06Adapting the Price: Promotional Pricing<br /><ul><li>Several pricing techniques to stimulate early purchase:
  • 41. Low-Interest Financing
  • 42. Longer Payment terms</li></ul>http://jeannequitoriano.blogspot.com<br />
  • 43. Concept 06Adapting the Price: Promotional Pricing<br /><ul><li>Several pricing techniques to stimulate early purchase:
  • 44. Warranties and Service Contracts</li></ul>http://jeannequitoriano.blogspot.com<br />
  • 45. Concept 06Adapting the Price: Promotional Pricing<br /><ul><li>Several pricing techniques to stimulate early purchase:
  • 46. Psychological Discounting</li></ul>http://jeannequitoriano.blogspot.com<br />
  • 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. 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. Case 1: Customer-segment pricing</li></ul>Men = PhP40.00<br />Boys = PhP35.00<br />http://jeannequitoriano.blogspot.com<br />
  • 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. Case 2: Product-form </li></ul>pricing<br />http://jeannequitoriano.blogspot.com<br />
  • 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. Case 3: Image Pricing</li></ul>http://jeannequitoriano.blogspot.com<br />
  • 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. 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. 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. 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. 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. Case 6: Time Pricing</li></ul>http://jeannequitoriano.blogspot.com<br />
  • 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. Drive to dominate the market through lower costs</li></ul>http://jeannequitoriano.blogspot.com<br />
  • 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. 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. 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. Low price buys market share but not market loyalty</li></ul>Exempli Gratia: MangInasalvsChicboy<br />http://jeannequitoriano.blogspot.com<br />
  • 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. 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. 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. Competitors respond by lowering their prices even more, triggering a price war</li></ul>Exempli Gratia:<br />http://jeannequitoriano.blogspot.com<br />
  • 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. 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. 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. 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. 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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