Marketing Management Chapter 14: Developing Pricing Strategies & Programs

1. DEVELOPING PRICING
STRATEGIES &
PROGRAMS
MARKETING MANAGEMENT S09
Golingo,Aldrich
S130348

2. CONTENT:
• #BecausePriceMatters
• #ItsBuyersVsSellers
• #ConsumersPriceResponses
• #SettingTheRightPrices
• #EffectivePricingStrategies

3. #BecausePriceMatters

4. #ItsBuyersVsSellers
• Get instant price
comparisons from
thousands of
vendors.
• Name their price
and have it met
• Get products free.
• Monitor customer
behavior and tailor
offers to individuals
• Give certain
customers access to
special prices
• Negotiate prices in
online auctions and
exchanges or even
in person

5. #ConsumersPriceResponses
• Fair price (what consumers feel the product
should cost)
• Typical Price
• Last Price Paid
• Upper-Bound Price (reservation price or the
maximum most consumers would pay)
• Lower-Bound Price (lower threshold price or
the minimum most consumers would pay)
• Historical Competitor Prices
• Expected Future Price
• Usual Discounted Price

6. #SettingTheRightPrices
• STEP 1: Selecting the Price objective
• Survival, Maximum Current Profit, Maximum Market Share, Maximum
Market Skimming, product – Quality Leadership
• STEP 2: Determining Demand
• Price Sensitivity, Estimating Demand Curves, Price Elasticity of Demand,
• STEP 3: Estimating Costs
• Types of Costs & Levels of Production, Accumulated Production, Target
Costing,
• STEP 4: Analyzing Competitors’ Cost, Prices and Offers
• STEP 5: Selecting a Pricing Method
• Markup Pricing, Target-Return Pricing, Perceived – Value Pricing, Value
Pricing, Going-Rate Pricing, Auction – Type Pricing
• STEP 6: Selecting the Final Price

7. #EffectivePricingStrategies
• GEOGRAPHICAL PRICING
• Barter
• Compensation deal
• Buyback Arrangement
• Offset
• PRICE DISCOUNTS AND
ALLOWANCES
• PROMOTIONAL PRICING
• Loss-leader pricing
• Special event pricing
• Special customer pricing
• Cash rebates
• Low interest financing
• Longer payment terms
• Warranties & service contracts
• Psychological discounting
• DIFFERENTIATED PRICING

8. DEVELOPING PRICING
STRATEGIES & PROGRAMS
SUMMARY:
• Understanding pricing
• Pricing Environment
• Setting prices
• Responding to Price Changes
• Adapting Prices