10. Cost-based pricing
involves setting
prices based on
costs of
producing, distributi
ng and selling the
product plus a fair
11.
12. setting high
prices to
“skim”
revenues layer
by layer from
the market.
Market-skimming
pricing
13. The product’s
The costs of producing
quality and
a smaller volume
image must
cannot be so high thatshould
Competitors
Buyers are not price-
support its
they cancel the andenter
not be able to a
sensitive
higher price
the market easily of
sufficient number and
advantage of charging
undercut the high
more
them must want the
price
product at that price
14. set a low initial
price in order
to penetrate the
market
quickly and
deeply
Market-Penetration
pricing
15. Production and must help
The low price
The market must be
distribution costs
keep out the competition
highly price-
and the penetration pricer
must fall as sales
must maintain so low-price
sensitive, its that a
volume increases
position – otherwise the
low price produces
price advantage may be
more market growth
only temporary
34. Initiating price cu
Situations may maya
A company lead
The to consider
firm firm may
also cut prices in a
cutting prices to
its price such
drive to dominate
cut
as excess
the market
boost sales and
capacity, falling
demand orlower
through falling
share.
costs.
market share,…
35. Initiating price inc
Making low-visibility price
moves first
Factors in price
increases: cost
inflation, over-
demand
Now I’d like to talk about Price adjustment strategyCompanies usually adjust their basic prices to account for various customer differences and changing situationFirst of all, discount and allowance. There are a couple of kinds of discounts included in this adjustment Cash discount: Which means that a buyer pay their bills before due might be deducted a certain % of bills The purpose of this kind is to reduce bad debts and credit-collection costs
Also being included in Discount and Allowance is QUANTITY DISCOUNT: Which simply means if the buyers purchase products or services in large volume, the price for this bulk will be discounted => The target of this act is to encourage buyers to buy more, and reduce the possibility of overstocking
The next sort of discount is TRADE DISCOUNTFor example, retail price of an item is reduced when sold to a reseller
Last but not least, SEASONAL DISCOUNT Currently we are in autumn, there are not many people purchase christmas decorating products, so if we purchase them now, we possibly be discounted a certain amount of cash
The second kind of price-adjustment strategy is “SEGMENTED PRICING”
The first item is customer-segmentedA good example for this is Let’s say, many teenagers in Britain pay for their cell phone services on a pre-paid basis, which is more expensive than the tariff for a monthly contract
Let’s move on product-form pricingA 1-litre bottle of Evian mineral water may cost 1.5 pound at local supermarketBut a 50 ml aerosol can of Evian sells for Spas or beauty bontique may be priced at over 5 pound
Time is moving on, so let’s turn to the third area of Segmented PRICING: Location pricingLet me give you an example, if you plan to study abroad in the US, you may not be surprised that state students are charged lower tuition fees than you, because you are non-state students.
The final area in segmented pricing is TIME PRICINGTelephone companies offer lower “off-peak” chargesElectricity costs less at night
Many customers use price to judge quality, they simply compare price between 2 products. Psychologically, the product which has price higher will be better.Price may tell you something about this productA cheapest app on App store is priced $0.99 but not 1. because psychologically, we normally pay attention to the first digit, which is nearer to 0 than 1
