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Top 10 Concepts of Chapter 14
1. 1 TOP 10 Learning Concepts Ch 14: Developing Pricing Strategies and Programs Bohong Li April 8 ,2011
2. 2 Outline Consumer Psychology and Pricing Steps in Setting Price Price-Adaptation Strategies
3. 3 Concept 1:Consumer Psychology and Pricing Reference Prices Price-quality inferences Price endings Price cues From Philip Kotler’s, Marketing Management, 13th Edition
4. 4 Concept 1:Reference Price is the that consumers expect or deem to be reasonable for a certain type of product. The price was used to be??? Frame of reference The way the price is presented Memory of past prices
5. 5 Concept 1:Price-quality inferences some consumers believe that price and quality are highly correlated whereas other consumers believe that price and quality are not highly correlated.
6. 6 Concept 1:Price endings: price ending is a marketing practice based on the theory that certain prices have a psychological impact. Firms that are using high prices to signal quality are more likely to set those prices at round numbers (9-ending prices)
7. 7 Concept 1:Price cues A price cue is defined as any marketing tactic used to persuade customers that prices offer good value compared to competitors’ prices, past prices or future prices.
8. 8 Concept 2:Steps in Setting Price Select the price objective Determine demand Estimate costs Analyze competitor price mix Select pricing method Select final price
9. 9 Concept 3:Step 1: Selecting the Pricing Objective Survival Maximum current profit Maximum market share Maximum market skimming Product-quality leadership
10. 10 Survival:if the companies are plagued with overcapacity, intense competition, or changing consumer wants. Maximum current profit: if the companies estimate the demand and costs associated with alternative prices Maximum market share: if they believe that a higher sales volume will lead to lower unites costs and higher long-run profit. Concept 3:Step 1: Selecting the Pricing Objective
11. 11 Maximum market skimming: companies unveiling a new technology favor setting high prices, and slowly drop price over time. Product-quality leadership: products or services characterized by high levels of perceived quality, taste, and status with a price just high enough not to be out of consumers’ reach. Concept 3:Step 1: Selecting the Pricing Objective
12. Concept 4:Step 2: Determining Demand Price Sensitivity Estimating Demand Curves Price Elasticity of Demand From Philip Kotler’s, Marketing Management, 13th Edition 12
13. Concept 5:Step 3: Estimating Costs Types of Costs Accumulated Production Activity-Based Cost Accounting Target Costing From Philip Kotler’s, Marketing Management, 13th Edition 13
14. 14 Fixed costs Variable costs Total costs Average cost Cost at different levels of production Concept 5:Step 3: Estimating Costs From Philip Kotler’s, Marketing Management, 13th Edition
15. Concept 6:Step 5: Selecting a Pricing Method Markup pricing Target-return pricing Perceived-value pricing Value pricing Going-rate pricing Auction-type pricing From Philip Kotler’s, Marketing Management, 13th Edition 15
16. 16 Impact of other marketing activities Company pricing policies Gain-and-risk sharing pricing Impact of price on other parties Concept 7:Step 6: Selecting the Final Price From Philip Kotler’s, Marketing Management, 13th Edition