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  • 1. DEVELOPING PRICING STRATEGIES AND PROGRAMS MARKMA Rhea G. Jardin May 11, 2012http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 2. Outline1. 6 Steps in Setting the Price2. 4 Price-adaptation Strategies http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 3. What is Price?Price is :- the one element of the marketing mix that produces revenue- the amount paid for some goods or services http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 4. Concept 1: 6 Steps in Setting the Price Selecting the Determining Estimatingpricing objective demand costs Price objective Demand Costs Selecting Analyze competitors’ costs,Selecting the pricing method prices, and offers final price Final Pricing price method Competitors http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 5. Concept 1: 1. Selecting the pricing objective Selecting the pricing objective Price objectiveSurvival (B/E) Maximize profit Maximize market share Product leadership Maximize market skimming http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 6. Concept 1: 2. Determining Demand Selecting the Determiningpricing objective demand Price objective Demand Surveys Demand elasticity Statistical analysis Price experiments http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 7. Concept 1: 3. Estimating costs Selecting the Determining Estimatingpricing objective demand costs Price objective Demand Costs Learning curve Fixed and Variable Cost per unit of production http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 8. Concept 1: 4. Analyze competitors’ costs, prices and offers Selecting the Determining Estimatingpricing objective demand costs Price objective Demand Costs Analyze competitors’ costs, prices, and offers Competitors Evaluate the competitors’ price and product value http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 9. Concept 1: 5. Selecting price method Selecting the Determining Estimatingpricing objective demand costs Price objective Demand Costs Selecting Analyze competitors’ costs, pricing method prices, and offers Pricing method Competitors Price Perceived markup value Value pricing Target Going-rate ROI pricing Auction- Break- type pricing even point http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 10. Concept 1: 6. Selecting final price Selecting the Determining Estimating pricing objective demand costs Price objective Demand Costs Selecting Analyze competitors’ costs, Selecting the pricing method prices, and offers final price Final Pricing price method Competitors Gain & risk sharing High advertising Pricing policiesPrice fixing http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 11. Concept 1: Selecting the 6 Steps in Setting the Price Determining Estimating pricing objective demand costs Price objective Demand Costs Surveys Learning Demand curveSurvival (B/E) Maximize profit elasticity Fixed and Variable Maximize market share Cost per Statistical unit of analysis Price Product experiments production leadership Maximize market skimming Selecting Analyze competitors’ costs, Selecting the pricing method prices, and offers final price Final Pricing price method Competitors Price Perceived markup value Evaluate the Gain & risk competitors’ sharing Value High pricing price and advertising product value Target Going-rate ROI pricing Pricing policies Auction- Break- Price fixing type pricing even point http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 12. Concept 2:4 Price-adaptation strategies 1. Geographical pricing 2. Price discounts and allowances 3. Promotional pricing 4. Differentiated pricinghttp://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 13. Concept 2: 1. Geographical pricing Barter Compensation deal Direct exchange of goods Payment in products and cashBuyback arrangement Offset Payment in form of products manufactured by the supplied Receives payment in cash but agrees to equipment and cash spend some of the money in the products of that country http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 14. Concept 2: 2. Price discounts and allowances Cash discount Quantity discount Discounts given to cash, Discounts given to those early or prompt payments who buy large volumes Seasonal discount Discounts given to products or services that are out of seasonTrade discount Allowances Discounts given by Discounts given to gainmanufacturers to resellers reseller participation in special programs http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 15. Concept 2: 3. Promotional pricingSpecial-event pricing Longer payment terms Low-interest financing Cash rebates Warranties and service contracts http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 16. Concept 2: 4. Differentiated pricingPrice discrimination - selling a product at two or more pricesCustomer-segment pricing - different customer groups pay different prices for the same product or serviceProduct-form pricing - different versions of the product are priced differently, but not proportionately to their costsImage pricing - the same product are priced at two different levels based on image differences http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 17. Concept 2: 4. Differentiated pricingChannel pricing - a product is priced depending on where it was purchase (fine restaurant, fast-food chain, or vending machine)Location pricing - same product is priced differently at different locations even though the cost is the sameTime pricing - prices are varied by season, day, or hour (weekend vs weekdays, “early bird” customers) http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.
  • 18. DEVELOPING PRICING STRATEGIES AND PROGRAMS MARKMA Rhea G. Jardin May 11, 2012http://ph.linkedin.com/pub/rhea-gayoso-jardin/4b/b47/b15.