Principles of Marketing

1. Outcome 4: Price and VariousOutcome 4: Price and Various
Pricing StrategiesPricing Strategies
You don’t sell through price. You sell
the price.

2. PRICE: DefinitionPRICE: Definition
is the amount of money charged for a
product or service. (Kotler)
is the total amount that being
exchanged
by the customer to obtain a benefit of the
product or service owning.

3. Factors to consider when settingFactors to consider when setting
priceprice
Good Value Pricing
Value Added Pricing

4. Factors to consider when setting priceFactors to consider when setting price
Good Value Pricing
Good-value pricing is offering the
 right combination of quality
and good service at a fair price.
This pricing gives your customer more quality for
less than they expected to pay.
Example: Used when you want to gain market
share, position your product with customers, or
obtain market acceptance of a new product.

5. Value Added PricingValue Added Pricing
Value-added pricing is a pricing strategy
that attaches value-added features and services
to differentiate a market offering and support
higher prices,
rather than cutting prices to match
competitors.
An example would be The Whole Foods
Market. As everyone might have known, The
Whole Foods Market offers natural and organic
foods with relatively expensive price compared
to other foods retailers.

6. PRICING STRATEGIESPRICING STRATEGIES

7. Pricing StrategiesPricing Strategies

8. Market skimming pricingMarket skimming pricing

10. Market penetration pricing:Market penetration pricing:

12. B. Product Mix Pricing StrategiesB. Product Mix Pricing Strategies
Product line pricing
Optional-product pricing
Captive-product pricing
Product bundle pricing

13. Product Line PricingProduct Line Pricing
Product line is a group of products that are closely related
because they function in similar manner and are sold to
the similar customer groups.
Strategy that uses one product with various class distinction.
Price set is based on the cost and quality differences, customer
value perception, demand.
Example: car model that has different model types that change
with performance and quality.

14. Optional-product pricingOptional-product pricing
Sets low price for the most basic product and
then makes profit from selling more expensive
accessories.
Examples: mobile phones, computer printers-
Ac adaptors, printer ink cartridges

15. B.3 Captive-product pricingB.3 Captive-product pricing
Offering a lower price for the core(main) product but
placing a higher mark-up on captive products
(products made specifically to be used with another).
Examples: shaving blades (captive product) for a razor
(core product), spare parts for a machine, software for
a computer or operating system
Camera and film, computer floppy

16. B.5 Product bundle pricingB.5 Product bundle pricing
Combining several products and offering
the bundle at a reduced price.
Firms in telecommunications, financial
services, health care, and information
industries frequently offer products in
bundles.

17. C. Price Adjustment PricingC. Price Adjustment Pricing
StrategiesStrategies
Discount and allowance pricing
Segmented pricing
Psychological pricing
Promotional pricing
Geographical pricing
Dynamic pricing

18. Discount and Allowance PricingDiscount and Allowance Pricing
Reductions to the selling price of
goods and services.
Applied anywhere in the
distribution channel between
manufacturer, middlemen, and
retail customer.
Used to promote sales, reduce
inventory, and encourage
behaviors that benefit the issuer
of the discount or allowance.

19. Discount and Allowance PricingDiscount and Allowance Pricing
Different types are:
Cash discount
Quantity discount
Trade discount
Partial payment
discount
Trade allowances

20. Segmented PricingSegmented Pricing
When two prices
are set for one
product without a
difference in
production or
distribution costs.
Example: purchase
from retail store
versus online
purchase

21.  Also called as “price
ending”.
 Based on the theory that
certain prices have a
psychological impact.
 Retail prices are often
expressed as “odd prices”.
A
32 oz.
$2.19
B
26 oz.
$1.99
C.3 Psychological Pricing

22. C.4 Promotional PricingC.4 Promotional Pricing
Involves reducing the price of
a product or service to
attract customers.
Effectively used across many
industries such as food
services, cosmetics, and
household cleaning supplies.
Example: BUY ONE GET
ONE FREE Scheme

23. C.5 Geographical PricingC.5 Geographical Pricing
The practice of
changing a basic list
price based on the
geographical location
of the buyer.
Intended to reflect the
costs of shipping to
different locations.

24. C.6 Dynamic PricingC.6 Dynamic Pricing
Also known as
“Discriminatory Pricing”,
Time-Based Pricing” or
“Third Degree Price
Discrimination”.
Occurs when customers are
divided into 2 or more
groups with separate
demand curves, and
different prices are charged
to each group.

25. Example-Example- AirlinesAirlines..
The airline industry alters the price of its
seats based on
 the type of seat,
the number of seats remaining,
and the amount of time before the flight
departs.
Thus, many different prices may be
charged for seats on a single flight.