Pricing strategy

1. Presented by: Bo Bunrath
May 2016

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1. Sales and profit over product life cycle;
2. Marketing innovation;
3. Pricing strategy;
4. Choosing a growth strategy;
5. Price reduction in growth;
6. Pricing the established product in maturity;
7. Pricing product in market decline;
8. Brand stage versus product life cycle.
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*Educate buyer about product benefit by given
sample. This method is used for consumer
goods, not durable goods.
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*For large amount of money per purchase,
educate direct sales force to evaluate about
buyer’s need and explain them about product
benefit. Ex: car, house, condo.
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*The product not sell directly but through
distribution network—wholesale or retailer—
with low wholesale price to have wholesale
discount to customer.
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*Differentiated product strategy: the firm direct
is marketing efforts toward developing unique
attributes (or images) for its product.
*Cost leadership strategy: the firm direct its
marketing efforts toward a low cost producer.
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*Focus on particular buyer segmentation or
industry-wide. Let buyer find uniquely
valuable.
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*Produce goods with low cost, either focused or
directed industry-wide to get large sales
volume. Ex: Wal-Mart
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*In some growth market, they need to answer these
questions
 Is there a market segment that require product benefit
and is willing pay premium price?
 Does the firm have requisite distinctive competence to
produce and market differentiated product?
 Is the market sufficiently price sensitive to produce
sufficient cost economies?
 Are the cost advantage that firm with small market share
can exploit?
 How much product specialization will the market pay for?
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*To speed up product adaptation process and profit
from fast market growth, firm reduce price. In
other case, price reduce because of
Production greater volume (economies) and price is
sensitive;
Sales volume determine which competing
technologies;
Production volume is greater than sales volume.
In these cases, firm sacrifice short term profit during
growth to ensure their profitability in maturity.
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*Firm that successfully execute their growth
strategies are usually able to price profitably in
maturity.
Unbundling related product and service;
Improved estimation of price sensitivity;
Improved control and utilization of costs;
Expansion of product line; and
Reevaluation of distribution channels.

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*Cutting price is the strategy in decline to exit
with minimum loses, and survive.
*Alternative strategies in decline
Retrenchment strategy: to refocus resources on
other where the firm has strong position.
Harvesting strategy: withdrawal from the
industry.
Consolidating strategy: combine many into one.

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*Brand stage: launch, maintain and retirement.
Unlike stage in life cycle, brand stage are not
defined by change in market; they are about
change in strategic objective.

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