<ul><li>www.helpwithassignment.com </li></ul>
<ul><li>www.helpwithassignment.com </li></ul><ul><li>Understand the six major stages of the process used to establish pric...
<ul><li>Price - a key element of the  value proposition  the company aims to deliver to customers. </li></ul><ul><li>What ...
Stages for establishing prices <ul><li>www.helpwithassignment.com </li></ul>
<ul><li>Pricing objectives  are goals that describe what a firm wants to achieve through pricing. </li></ul><ul><li>Form t...
<ul><li>Demand is a relationship between the  price & quantity  consumers are willing to buy </li></ul><ul><li>Demand anal...
<ul><li>Traditional demand curve slopes downwards </li></ul><ul><ul><li>Prices rise, demand falls & vice versa </li></ul><...
<ul><li>Some of the pricing objectives that companies might set for themselves are: </li></ul><ul><ul><li>Survival- new or...
<ul><li>Sales Promotion </li></ul><ul><li>Short period attractive price </li></ul><ul><li>Inducement to trial </li></ul>Wh...
Pricing-Lec 22 & 23 Competitive Strategy Positioning Continuum price Unique - ness Low cost focus Differentiation focus St...
<ul><li>The importance of price  depends on: </li></ul><ul><ul><li>Type of product </li></ul></ul><ul><ul><li>Type of targ...
<ul><li>Social norms – experience combine to create the perception that  the higher the price, the higher the quality </li...
<ul><li>Sources of competitors’ pricing information: </li></ul><ul><ul><li>Comparative shoppers - persons who systematical...
<ul><li>The 3 major dimensions on which prices can be based are: </li></ul><ul><ul><li>Cost </li></ul></ul><ul><ul><li>Dem...
<ul><li>Cost-based pricing  </li></ul><ul><ul><li>Adding a dollar amount or percentage to the  cost of the product. </li><...
<ul><li>Demand-based pricing </li></ul><ul><ul><li>Customers pay a higher price when demand for a product is strong, and a...
<ul><ul><li>A pricing strategy is an approach or a course of action designed to achieve pricing and marketing objectives. ...
<ul><li>High initial price for quick ROI </li></ul><ul><li>Inelastic demand </li></ul><ul><li>Price insensitivity by the m...
<ul><li>Low initial price with elastic demand  </li></ul><ul><li>Volume for lower production costs </li></ul><ul><li>Immin...
<ul><li>GP’s fee practices </li></ul><ul><li>Raising prices for necessities in disaster areas </li></ul><ul><li>Electricit...
<ul><ul><li>Product-line pricing </li></ul></ul><ul><ul><ul><li>Captive pricing – low main price with high prices for extr...
<ul><li>After determining a pricing strategy that yields a certain price, the price may need refinement to make it consist...
<ul><li>Provide an estimate of volume (units) of sales necessary to cover total costs (or break even) </li></ul><ul><ul><l...
<ul><ul><li>Break-even volume   = fixed cost / (price – variable cost) </li></ul></ul>Figure: Break-Even Chart for Determi...
<ul><li>BEP (in units) = Fixed costs </li></ul><ul><li>Price - variable costs </li></ul><ul><li>Price per unit =$100 </li>...
<ul><li>www.helpwithassignment.com </li></ul><ul><li>About the Company:  HelpWithAssignment.com is an online tutoring comp...
Upcoming SlideShare
Loading in …5
×

Pricing Strategy

26,423 views

Published on

The presentation is about Pricing Strategy. An important concept in Marketing, it is a tool which is used for deciding what the price of the product should be and what are the factors that influnce the price of the product, etc.

Published in: Education, Business
4 Comments
56 Likes
Statistics
Notes
No Downloads
Views
Total views
26,423
On SlideShare
0
From Embeds
0
Number of Embeds
10
Actions
Shares
0
Downloads
0
Comments
4
Likes
56
Embeds 0
No embeds

No notes for slide
  • This is an example of the ‘Cash Flow’ price objective. Critical Thinking Question : What is Amart trying to do with this ad? Do you think it would attract a great deal of interest? Why? Answer : Amart is trying to attract potential customers within a defined and short period of time, to clear stock and increase cash flow. Yes – it is likely that the low price per pair, coupled with the offer of 2 pairs for $80, will be highly attractive to buyers who are flexible in their purchase preferences (i.e.. not brand-loyal to competitive runners) and have funds to spend immediately. It should induce many to bring forward their purchase intentions.
  • Pricing Strategy

    1. 1. <ul><li>www.helpwithassignment.com </li></ul>
    2. 2. <ul><li>www.helpwithassignment.com </li></ul><ul><li>Understand the six major stages of the process used to establish prices. </li></ul><ul><li>Describe how marketers analyze competitive prices. </li></ul><ul><li>Breakeven analysis (Important point) </li></ul><ul><li>Discuss the bases used for setting prices. </li></ul><ul><li>Explain the different types of pricing strategies. </li></ul><ul><li>Understand how a final specific price is determined. </li></ul>
    3. 3. <ul><li>Price - a key element of the value proposition the company aims to deliver to customers. </li></ul><ul><li>What is value? </li></ul><ul><ul><li>And equally important – what is the customer’s perception of value </li></ul></ul><ul><ul><li>Ray ban & a $20 pair of glass </li></ul></ul><ul><li>There is a six stage process that marketers can use when setting prices. </li></ul><ul><li>These stages are not rigid steps; rather they are logical guidelines. </li></ul><ul><li>www.helpwithassignment.com </li></ul>
    4. 4. Stages for establishing prices <ul><li>www.helpwithassignment.com </li></ul>
    5. 5. <ul><li>Pricing objectives are goals that describe what a firm wants to achieve through pricing. </li></ul><ul><li>Form the basis for decisions about other stages of pricing. </li></ul><ul><li>Must be consistent with the firm’s overall marketing objectives. </li></ul><ul><li>Can use one or multiple objectives (which can be both short-term and long-term). </li></ul><ul><li>www.helpwithassignment.com </li></ul>
    6. 6. <ul><li>Demand is a relationship between the price & quantity consumers are willing to buy </li></ul><ul><li>Demand analysis based on: </li></ul><ul><ul><li>Historical data- earlier yrs </li></ul></ul><ul><ul><li>Estimate of sales potential </li></ul></ul><ul><ul><li>Estimate of price-volume relationships </li></ul></ul><ul><ul><li>Price elasticity-sensitivity of consumer demand to price </li></ul></ul><ul><li>www.helpwithassignment.com </li></ul>
    7. 7. <ul><li>Traditional demand curve slopes downwards </li></ul><ul><ul><li>Prices rise, demand falls & vice versa </li></ul></ul><ul><ul><li>Prestige products unique demand curve up to a point. </li></ul></ul><ul><ul><ul><li>Increasing prices may indicate increase in demand due to perceived quality, prestige and exclusivity conveyed by the price </li></ul></ul></ul><ul><ul><ul><li>Brands can be included in ‘prestige products’. They aim to differentiate & positioned appropriately can get out of the price competition. </li></ul></ul></ul><ul><li>www.helpwithassignment.com </li></ul>
    8. 8. <ul><li>Some of the pricing objectives that companies might set for themselves are: </li></ul><ul><ul><li>Survival- new or fading organisations (CST) </li></ul></ul><ul><ul><li>Profit </li></ul></ul><ul><ul><li>Return on investment </li></ul></ul><ul><ul><li>Market share </li></ul></ul><ul><ul><li>Cash flow </li></ul></ul><ul><ul><li>Status quo </li></ul></ul><ul><ul><li>Product quality </li></ul></ul><ul><li>www.helpwithassignment.com </li></ul>
    9. 9. <ul><li>Sales Promotion </li></ul><ul><li>Short period attractive price </li></ul><ul><li>Inducement to trial </li></ul>What is Amart trying to do with this ad? Do you think it would attract a great deal of interest? Why? <ul><li>www.helpwithassignment.com </li></ul>
    10. 10. Pricing-Lec 22 & 23 Competitive Strategy Positioning Continuum price Unique - ness Low cost focus Differentiation focus Strategic Pricing Concerns Legal Concerns Ethical Concerns <ul><li>www.helpwithassignment.com </li></ul>
    11. 11. <ul><li>The importance of price depends on: </li></ul><ul><ul><li>Type of product </li></ul></ul><ul><ul><li>Type of target market </li></ul></ul><ul><ul><li>The purchase situation </li></ul></ul><ul><li>Value focus: </li></ul><ul><ul><li>Combines a product’s price and quality attributes, which </li></ul></ul><ul><ul><li>Customers use to differentiate among competing brands. </li></ul></ul><ul><ul><li>Helps marketers correctly assess the target market’s evaluation of price. </li></ul></ul><ul><li>www.helpwithassignment.com </li></ul>
    12. 12. <ul><li>Social norms – experience combine to create the perception that the higher the price, the higher the quality </li></ul><ul><li>Marketer’s determine buyer’s attitude about the expected cost of a product </li></ul><ul><li>www.helpwithassignment.com </li></ul>
    13. 13. <ul><li>Sources of competitors’ pricing information: </li></ul><ul><ul><li>Comparative shoppers - persons who systematically collect data on competitors’ prices. </li></ul></ul><ul><li>Importance of knowing competitors’ prices: </li></ul><ul><ul><li>Helps determine how important price will be to customers. </li></ul></ul><ul><ul><li>Helps marketers in setting competitive or appropriate prices for their products. </li></ul></ul><ul><li>www.helpwithassignment.com </li></ul>
    14. 14. <ul><li>The 3 major dimensions on which prices can be based are: </li></ul><ul><ul><li>Cost </li></ul></ul><ul><ul><li>Demand </li></ul></ul><ul><ul><li>Competition </li></ul></ul><ul><li>The selection of the basis for pricing to use is affected by: </li></ul><ul><ul><li>Type of product </li></ul></ul><ul><ul><li>Market structure of the industry </li></ul></ul><ul><ul><li>Brand’s market share relative to competing brands </li></ul></ul><ul><ul><li>Customer characteristics </li></ul></ul><ul><li>www.helpwithassignment.com </li></ul>
    15. 15. <ul><li>Cost-based pricing </li></ul><ul><ul><li>Adding a dollar amount or percentage to the cost of the product. </li></ul></ul><ul><ul><li>Cost-plus pricing </li></ul></ul><ul><ul><ul><li>Adding a specified dollar amount or percentage to the seller’s cost. </li></ul></ul></ul><ul><ul><li>Markup pricing </li></ul></ul><ul><ul><ul><li>Adding to the cost of the product a predetermined percentage of that cost. </li></ul></ul></ul><ul><li>www.helpwithassignment.com </li></ul>
    16. 16. <ul><li>Demand-based pricing </li></ul><ul><ul><li>Customers pay a higher price when demand for a product is strong, and a lower price when demand is weak. </li></ul></ul><ul><ul><li>Effectiveness depends on marketer’s ability to estimate demand accurately. </li></ul></ul><ul><li>Competition-based pricing </li></ul><ul><ul><li>Pricing is influenced primarily by competitors’ prices. </li></ul></ul><ul><ul><li>Importance increases when competing products are relatively homogeneous. </li></ul></ul><ul><ul><li>May necessitate frequent price adjustments. </li></ul></ul><ul><li>www.helpwithassignment.com </li></ul>
    17. 17. <ul><ul><li>A pricing strategy is an approach or a course of action designed to achieve pricing and marketing objectives. </li></ul></ul><ul><ul><li>Differential pricing </li></ul></ul><ul><ul><ul><li>Negotiated pricing – bargaining </li></ul></ul></ul><ul><ul><ul><li>Secondary-market pricing – different markets have different prices </li></ul></ul></ul><ul><ul><ul><li>Periodic discounting – temporary reduction in a pattern or systematic manner (X-Mas Sale) </li></ul></ul></ul><ul><ul><ul><li>Random discounting – unsystematic (Briscos) </li></ul></ul></ul><ul><ul><li>New-product pricing </li></ul></ul><ul><ul><ul><li>Price skimming – go high early. </li></ul></ul></ul><ul><ul><ul><li>Penetration pricing – go low early </li></ul></ul></ul><ul><li>www.helpwithassignment.com </li></ul>
    18. 18. <ul><li>High initial price for quick ROI </li></ul><ul><li>Inelastic demand </li></ul><ul><li>Price insensitivity by the market </li></ul>Skimming Pricing Strategy Introduction Growth Maturity Decline Strategic Pricing Concerns Legal Concerns Ethical Concerns Penetration Pricing Strategy <ul><li>www.helpwithassignment.com </li></ul>
    19. 19. <ul><li>Low initial price with elastic demand </li></ul><ul><li>Volume for lower production costs </li></ul><ul><li>Imminent competition </li></ul>Penetration Pricing Strategy Introduction Growth Maturity Decline Strategic Pricing Concerns Ethical Concerns Skimming Pricing Strategy Legal Concerns <ul><li>www.helpwithassignment.com </li></ul>
    20. 20. <ul><li>GP’s fee practices </li></ul><ul><li>Raising prices for necessities in disaster areas </li></ul><ul><li>Electricity prices in winter </li></ul>Pricing-Lec 22 & 23 Strategic Pricing Concerns Legal Concerns Ethical Concerns <ul><li>www.helpwithassignment.com </li></ul>
    21. 21. <ul><ul><li>Product-line pricing </li></ul></ul><ul><ul><ul><li>Captive pricing – low main price with high prices for extras </li></ul></ul></ul><ul><ul><ul><li>Premium pricing – high quality demands high price </li></ul></ul></ul><ul><ul><ul><li>Bait pricing - pricing to get them in, then trade up to higher item </li></ul></ul></ul><ul><ul><ul><li>Price lining – prices for various groups of products </li></ul></ul></ul><ul><li>www.helpwithassignment.com </li></ul>
    22. 22. <ul><li>After determining a pricing strategy that yields a certain price, the price may need refinement to make it consistent with pricing practices in the particular market or industry. </li></ul><ul><li>The way pricing is used in the marketing mix will affect the final price. </li></ul><ul><li>Only a recommended retail price can be quoted to resellers. </li></ul><ul><li>Pricing is a flexible and convenient way to adjust the marketing mix. </li></ul>Stage 6: Determination of a specific price <ul><li>www.helpwithassignment.com </li></ul>
    23. 23. <ul><li>Provide an estimate of volume (units) of sales necessary to cover total costs (or break even) </li></ul><ul><ul><li>Conducted for a period or a project or for a marketing campaign </li></ul></ul><ul><ul><li>Total costs consist of fixed and variable cost </li></ul></ul><ul><ul><li>Fixed costs do not vary with the change in the number of units produced or sold. E.g. rent , advertising etc. </li></ul></ul><ul><ul><li>Variable costs vary directly with the number of units produced or sold. E.g. wages, materials, sales commission. </li></ul></ul><ul><ul><li>BEP is the point at which </li></ul></ul><ul><ul><ul><li>the total costs (fixed plus variable) of producing a product </li></ul></ul></ul><ul><ul><ul><li>becomes equal to the total revenue made from selling the product. </li></ul></ul></ul><ul><li>www.helpwithassignment.com </li></ul>
    24. 24. <ul><ul><li>Break-even volume = fixed cost / (price – variable cost) </li></ul></ul>Figure: Break-Even Chart for Determining Target-Return Price and Break-Even Volume Variable cost Below this point total cost is more than total income Above this point total income is more than total cost <ul><li>www.helpwithassignment.com </li></ul>
    25. 25. <ul><li>BEP (in units) = Fixed costs </li></ul><ul><li>Price - variable costs </li></ul><ul><li>Price per unit =$100 </li></ul><ul><li>AVC = $60 </li></ul><ul><li>Fixed costs =$120000 $ 120,000 </li></ul><ul><li> $40 </li></ul><ul><li>BEP = 3000 units. </li></ul><ul><li>www.helpwithassignment.com </li></ul>
    26. 26. <ul><li>www.helpwithassignment.com </li></ul><ul><li>About the Company: HelpWithAssignment.com is an online tutoring company. Our network spans 3 continents and several countries. </li></ul><ul><li>We offer three kinds of services: Assignment Help, Thesis Help and Online Tuitions for students in their college or University. </li></ul><ul><li>Visit us at http://www.helpwithassignment.com/ and our Blog http://helpwithassignment.blogspot.com / </li></ul>

    ×