The document discusses strategies for pricing products and services based on costs, competition, and customer value. The goals are to lower customer acquisition costs by 50% and increase customer retention rates by 50% by December 2015. Key topics covered include understanding competition, using PEST analysis to analyze the external environment, estimating market size, using cost-plus pricing while also considering customer experience and value, and managing price increases by explaining value and giving customers choices.

2. Let’s refresh ourselves of our
aims and goals of doing this work

3. Our Aim
By December 2015 we will have a tool kit that will provide the
basis of a marketing plan – a route map by which you can bring
your product / service directly to market.
Our Goal
For 2016 it is to lower the cost of getting
customers by 50% and
increase the rate of keeping them by 50%

4. Review on what’s we have
discussed so far?
 The Marketing Audit – what we are doing or
planning to do
 Setting out some goals based around numbers
including break-evens. The difference between
activity and strategy
 Customer buying behaviours – getting to grips
with customer value. Boston Matrix and a
customer audit
 Understanding what makes us different and why
that is important. Pro-active pricing and how to
create demand for the biggest contribution

5. This Months BIG session
Pricing for profit - the impact and risks of
changing prices.
The aims
• The Determinants of Price
• Price Elasticity – what it means for you
• Social media strategies for moving your
customer away from price to focus on
‘value’

8. The Determinants of Price
Pric
Competition
External
Environment
Costs +
Value
Consumer
Experience

9. Pricing
Competition

10. What you need to know about your
competition to judge pricing freedom?
• How well are
are the
competition
resourced?
• Where are
are the
competiti
on?
• What are
the
competiti
on doing?
• What
drives the
competiti
on?
Objectives Strategy
ActionsAssumptions

11. Competitor analysis matrix
Rate on a scale 1-5
My
Business
Strengths Weakness
Competitor
A
Competitor
B
Competitor
C
Competitor
D
Importance
to
customer
Products
Price
Quality
Selection
Service
Reliability
Stability
Expertise
Company Reputation
Location
Appearance
Sales Method
Credit policies
Advertising
Image

12. The Determinants of Price
Pric
Competition
External
Environment
Costs +
Value
Consumer
Experience

13. Using the PEST Model to
understand your market place
External
Environment
Political
Economic
Social
Technolo
gical
Political: Elections,
policies, laws and
legislation, war,
terrorism, current-
affairs, overseas
sensitivities, local and
national,
Economics: trends,
taxation now and
planned, spending
plans, unemployment,
disposable income
Social: demographics –
(age, sex, family sizes),
lifestyle, population
shift, housing trends,
fashion, attitudes to life
and work, earning
capacity
Technological:
inventions, innovations,
research, waste and
recycling,
obsolescence

14. PEST - Continued
Stage 1: Clearly identify the subject of the
analysis – some options might be:
A Company looking at the existing market
A brand in relation to its market
A possible piece of collaboration
A strategic option for entering into a new
market
Clearly framing the PEST analysis as the subject
of an investigation will clarify the outcome

15. Market Size – How to estimate it?
Theoretical Market Size
Potential Market
Available Market
Target Market
Actual
market Share

16. Market Size – some advice
Stay objective
Be honest and unbiased
Set your objectives realistically
Be prepared to be wrong

17. The Determinants of Price
Pric
Competition
External
Environment
Cost
s +
Valu
e
Consumer
Experience

18. Cost Plus Pricing
Starts with an accurate analysis of costs per unit
of output
A minimum acceptable return on an investment
The goal is to identify “the lowest
reasonable price” at which you can
achieve a desired return
Always test and record assumptions around
economies of scale
It is only a model – one of many

19. Setting the pricing floor
Cost plus Pricing
Cost of materials £ 8.05
+ Cost of Labour £ 9.27
+ Allocated Overhead costs £9.68
= Total Cost of delivery £27.00
Apply Mark-up – say 45% based on minimum
acceptable return
Selling price equals £27.00 x 1.45 = £39.15

20. The Pros and Cons of Cost Plus
It is simple to understand
It is guaranteed to return a consistent profit
It provides a starting point which circumvents the
need for research
And the cons…
It encourages inefficiencies
It is inward focussed
It ignores value generation
A customer does not care what it costs to make
It does not work

21. The Determinants of Price
Pric
Competition
External
Environment
Costs +
Value
Consum
er
Experien
ce

22. Value is the Experience of the
Consumer - Bottled

23. What makes for a great customer
experienceEveryone is different but here are six
suggestions for you to work with:
1. Attentiveness
2. Recognition
3. Personalisation
4. Consideration
5. Appreciation
6. Aim higher

24. Don’t be afraid to increase prices but
manage the process
Price Elasticity of Demand
A measure of the relationship between a change
in the quantity demanded of a particular good
and a change in its price.
Three ways to ease the change:
1. Give advance notice - communicate
2. Explain Costs – demonstrate value
3. Offer choices – pro-active pricing

25. Please welcome