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Untuk pelajar-pelajar NMIT di EDUCITY yang mengambil sabjek ini pada Jan 2015

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  2. 2. LESSON 7B OBJECTIVES • Define what price is • Describe the different types of pricing strategies • Describe the different types of price adjustment strategies
  3. 3. WHAT IS PRICE? (HARGA) • the amount charged for a product or service or the sum of values consumers exchange for the benefits of having or using the product or service
  4. 4. THE MANY NAMES OF “PRICE” Rent (Sewa) Fee (Yuran) Rate (kadar) Commission (dalal) Fare (tambang) Toll (tol) • Bribe (rasuah) • Salary (gaji) • Wage (upah) • Interest (faedah) • Tax (cukai)
  5. 5. Characteristics of price • The only element to produce revenues (satu- satunya yang boleh mendatangkan pendapatan) • Most flexible (luwes) element • Can be changed quickly (senang ubah) • You may start a price competition with it (boleh mula perang harga di pasaran) • You may also make common mistakes using it
  6. 6. PRICING STRATEGIES NEW & INNOVATIVE PRODUCTS • Penetration Pricing • Skimming Pricing IMITATIVE PRODUCTS • Matrix Pricing (according to quality) OTHER PRICING STRATEGIES • Product line pricing • Optional-Product pricing • Captive-product pricing • By-product pricing • Bundle pricing • Competition pricing • Premium pricing • Cost-based pricing
  7. 7. PENETRATION PRICING • The organisation sets a low price to increase sales and market share. • Once market share has been captured the firm may well then increase their price.
  8. 8. SKIMMING PRICING • The organisation sets an initial high price and then slowly lowers the price to make the product available to a wider market. • The objective is to skim profits of the market layer by layer.
  9. 9. IMITATIVE (‘ME TOO’) PRODUCTS quality (high - medium - low) price (high - medium - low) Matrix – 9 strategies for example high price, high quality (premium strategy) low price, medium quality (good value strategy) low price, low quality (economy strategy)
  10. 10. EXAMPLE Low price, low quality Medium Price, Medium quality
  11. 11. PRODUCT LINE PRICING • Pricing different products within the same product range at different price points. Example: Samsung offering different smartphones with different features at different prices. The greater the features and the benefit obtained the greater the consumer will pay. This form of price discrimination assists the company in maximising turnover and profits.
  12. 12. OPTIONAL PRICING • The organisation sells optional extras along with the product to maximise its turnover. Example: Tune Hotel, Dominos Pizza. You pay for a standard pizza but if you order additional cheese toppings, cheese sticks or pepsi, you have to pay more.
  13. 13. CAPTIVE PRICING • Pricing products that must be used with the main product. High margins are often most set for supplies. Example: Canon sells an ink jet printer for only RM148, but an ink cartridge costs a whopping RM91. Customers have no choice but to buy the ink cartridge when they run out of it.
  14. 14. BY-PRODUCT PRICING • Pricing low-value products to get rid of them - example : Free samples sold separately - Premiums of obsolete items
  15. 15. BUNDLE PRICING • The organisation bundles a group of products at a reduced price. Common methods are buy one and get one free promotions (BOGOF). Example: This strategy is very popular with supermarkets who often offer BOGOF strategies.
  16. 16. COMPETITION PRICING • Setting a price in comparison with competitors. A company has three options and these are to price lower, price the same or price higher. Example: Some firms offer a price matching what their competitors are offering.
  17. 17. PREMIUM PRICING The price set is high to reflect the exclusiveness of the product. Example: iPhone, First Class services, Porsche, Gucci, Starbucks, Resort Hotels
  18. 18. COST BASED PRICING • The firms takes into account the cost of production and distribution, they then decide on a mark up which they would like for profit to come to their final pricing decision. Example: If a piece of curry-puff costs them RM0.20 and they want to make a profit of RM0.10, then they will sell the curry puff for RM0.30
  19. 19. PRICE ADJUSTMENT STRATEGIES • They refer to all strategies which are applied by an organization that take into consideration the differences amongst customers and the rapidly changing environment. They are:- • Discounts and allowances • Segmented pricing • Psychological pricing • Promotional pricing • Geographic pricing • International pricing
  20. 20. DISCOUNTS AND ALLOWANCES Reduction to the list price for: Cash discount – payment by cash or early payment Quantity discount - larger quantity purchased Seasonal discount - purchasing out of season Functional discount - performing a function (ie returns or delivery) Promotional allowance – paid by the manufacturer when a retailer helps advertise and promote the manufacturer’s product
  21. 21. SEGMENTED PRICING Adjust price based on differences in:- customer group (locals, foreigners) product form (bottle, soft-pack) place – city, town, “kampung” Time (evening, weekends, festive seasons)
  22. 22. The seller here will consider the psychology of price and the positioning of price within the market place. Example: The seller charges 99 sen instead of RM1 or RM199 instead of RM200. Buyers will still say they purchased their product under RM200, even thought it was a ringgit away. Psychological Pricing
  23. 23. PROMOTIONAL PRICING temporary price reductions to increase sales loss leader special event pricing mark downs to clear obsolete stock • cash rebates • interest free credit
  24. 24. GEOGRAPHICAL PRICING FOB - free on board Company pays freight Uniform delivered pricing same freight charged to all locations Zone pricing freight cost varies across zones International pricing pricing reflects conditions and expectations in different world markets
  25. 25. INTERNATIONAL PRICING • Prices charged in a specific country depend on many factors: Economic conditions (keadaan ekonomi) Competitive situation (peringkat persaingan) Laws/regulations (rang undang-undang) Distribution system (pengagihan) Consumer perceptions Cost considerations
  26. 26. A PLATE OF ‘MEE GORENG’ KOSONG Indonesia : 3000 Rupiah HongKong: HK$15 Singapore : S$4.00 Malaysia : RM4.00 Japan: ¥700 USA: US$6.00 RM6 RM10RM1.2 5 RM20 RM21