marketing

1. Principles of Marketing
Kotler and Armstrong
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Chapter 11:
Pricing Strategies
Additional Considerations
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2. Pricing Strategies
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3. Pricing Strategies
Learning Objectives
• Objective 1: Describe the major strategies for pricing
new products.
• Objective 2: Explain how companies find a set of prices
that maximizes the profits from the total product mix.
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4. Pricing Strategies
Learning Objectives
• Objective 3: Discuss how companies adjust their prices
to take into account different types of customers and
situations.
• Objective 4: Discuss the key issues related to initiating
and responding to price changes.
• Objective 5: Overview the social and legal issues that
affect pricing decisions.
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5. Pricing Strategies
Learning Objective 1
• Describe the major strategies for pricing new products.
New Product Pricing Strategies
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6. New Product Pricing Strategies
Market-skimming Pricing
Market-skimming pricing strategy sets high initial prices to
“skim” revenue layers from the market.
• Product quality and image must support the price.
• Buyers must want the product at the price.
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7. New Product Pricing Strategies
Market-penetration Pricing
Market-penetration
pricing involves
setting a low price
for a new product
in order to attract a
large number of
buyers and a large
market share.
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8. Product Mix Pricing Strategies
Captive Product Pricing
Captive product
pricing sets prices
of products that
must be used
along with the
main product.
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9. Product Mix Pricing Strategies
By-product and Product Bundle Pricing
By-product pricing sets a price for by-products in
order to make the main product’s price more
competitive.
Product bundle pricing combines several products at
a reduced price.
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10. Price Adjustment Strategies
Discount and Allowance Pricing
Discount and allowance pricing reduces prices to
reward customer responses such as making
volume purchases, paying early, or promoting
the product.
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11. Price Adjustment Strategies
Segmented Pricing
Segmented pricing
involves selling a
product or service
at two or more
prices, where the
difference in prices
is not based on
differences in costs.
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12. Price Adjustment Strategies
Promotional Pricing
Promotional pricing is
temporarily pricing
products below the list
price, and sometimes
even below cost, to
increase short-run sales.
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13. Price Adjustment Strategies
Geographical Pricing
Geographical pricing is used for customers in different
parts of the country or the world.
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14. Price Adjustment Strategies
International Pricing
International pricing sets
prices in a specific
country based on many
factors.
• Economic conditions
• Competitive situations
• Laws and regulations
• Wholesaling and retail
systems
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15. Public Policy and Pricing
Pricing Across Channel Levels
Deceptive pricing occurs when a seller states prices or
price savings that mislead consumers or are not
actually available to consumers.
• Bogus reference or comparison prices
• Scanner fraud and price confusion
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