Developing appropriate pricing strategies is important for businesses. The pricing environment has changed with easy access to credit, marketing campaigns, and technology that allows buyers to easily compare prices online and find deals. Sellers now monitor customer behavior to tailor offers and prices to different customers. To develop effective strategies, marketers must understand how consumers perceive prices based on reference points, inferences about quality, and psychological effects of price endings. Consumers compare prices to internal reference values and may assume higher prices mean better quality, though additional information can change this.

1. Developing Pricing strategies and
programs : Part 1

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 do consumers
process and evaluate
prices?

8. Traditionally ,
economists
assumed
consumers were
price takers.

9. Marketers should know that
consumers actively process
price information.
How prices are perceived
depends on their disposable
income, occasion of purchase,
economic conditions etc

10. 3 Key Topics
to understand how
consumers perceive
prices.

11. Reference
prices
Fair price, typical price, last paid price,
upper bound price, lower bound price,
historical competitor prices, expected
future price, usual discounted price
Consumers evoke
one of these
frames of
reference to arrive
at their perceived
price.

12. Price-quality
inferences
Greater the price,
better the quality
When information
about true quality
is available, this
does not apply.

13. Price
endings
The way a price ends
influences a buyer’s psychology
Prices ending in
odd numbers, 9,
0, 5 lures in
buyers.

14. Recap!
How do
consumers
process and
evaluate
prices?
Reference
prices
Price - Quality
inferences
Price endings

15. Thank you!