How should a company adapt prices to meet varying circumstances and opportunities
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Assignment submission of a summer internship program on marketing
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How should a company adapt prices to meet varying circumstances and opportunities
- 1. Developing Pricing strategies and programs : Part 3
- 2. The only element of the marketing mix that produces revenue! The other elements produce costs. It is also the easiest to adjust!
- 3. Internet especially has had a profound impact on buyers and sellers! Changing pricing environment: Easy access to credit, enticing market campaigns, progressive technology
- 4. Buyers can Get instant price comparisons from a slew of vendors Name their price and have it met (Priceline.com) Get free products (eg: free software products)
- 5. Monitor customer behaviour and tailor offers accordingly Give certain customers access to special prices Negotiate prices in online auctions and in person Sellers can
- 6. Developing appropriate pricing strategies and programs is extremely important!!
- 7. How should a company adapt prices to meet varying circumstances and opportunities?
- 8. Firms usually do not set a single price. They develop a pricing structure instead.
- 9. Pricing structure reflects Geography And other similar features Purchase timing Market segment requirement
- 11. Geographical Pricing Different prices in different locations. Should the firm charge higher prices to distant customers to cover higher shipping costs or a lower price to win additional business? How should a firm account for different exchange rates and currencies?
- 12. Price discounts and allowances For early payment, volume purchases and off season buying. Must do this carefully or profits might turn out to be lower than what was expected.
- 13. Promotional pricing Pricing techniques to stimulate early purchase. Special event pricing Special customer pricing Cash rebates: helps clear inventories without cutting down on list price Longer payment terms Warrantees and service contracts Psychological discounting: setting an artificially high price and then offer discounts
- 14. Promotional pricing strategy is a zero sum game If they work, competitors copy them and their effectiveness is lost If they don’t work, they are a waste of money which could have been used for other purposes.
- 15. Differentiated Pricing: Firm sells its products at two or more prices that do not reflect a proportional difference in costs First degree price discrimination: Good sold at the maximum price each buyer is willing to pay. Second degree price discrimination: Price varies according to quantity demanded by the customer Third Degree Price discrimination: Different prices to different consumer groups. Eg: Location pricing, time pricing, image pricing etc
- 16. Is Price discrimination legal? If the seller can prove costs incurred are different for different buyers, then price discrimination is legal. Predatory pricing is illegal. That is selling below cost with the intention of destroying competition
- 18. Thank you!