This document outlines six steps for setting a pricing policy: 1) Selecting the pricing objective such as survival, profit, or market share; 2) Determining demand through analyzing price sensitivity, elasticity, and surveys; 3) Analyzing costs through accumulated production and target costing; 4) Analyzing competitors' costs, prices, and offers; 5) Selecting a pricing method like markup, target-return, or value pricing; 6) Selecting the final price considering risks and impacts on other parties. The document was created by Subhasis Panda during an internship with Prof. Sameer Mathur.

1. SETTING THE PRICE

2. Variations of brands for different
price points
MARIOTT HOTELS

3. Steps in Setting a Pricing Policy

4. Step 1:Selecting The Pricing Objective
Survival
Maximum Current
Profit
Maximum Market
Share
Maximum Market
Skimming

5. Product Quality Leadership

6. Step 2:Determining Demand

7. Price Sensitivity
Price Elasticity
Estimating Demand Curves
Surveys
Price Experiments
Statistical Analysis

8. Step 3:

9. Accumulated Production
-decline with the
average cost
Target Costing
-concentrated effort by
engineers & designers
to achieve a particular
reduced cost

10. Step 4:Analyzing Competitor’s Costs, Prices,&
Offers

11. Anticipating Competitor’s reactions
-Assuming standard way to a price change
-Considering each change a fresh-new
challenge

12. Step 5:Selecting a Pricing method

13. Markup pricing
Target-return pricing
Perceived Value Pricing

14. Value Pricing

15. Going-rate Pricing
Auction-type Pricing
English auctions (ascending bids)
Dutch auctions(descending bids)
Sealed-bid auctions

16. Step 6:Selecting The Final
Price

17. Gain & Risk Sharing pricing
Impact of Price on other parties

18. Created by
Subhasis Panda, IIT Bombay,
during an internship by
Prof.Sameer Mathur, IIM Lucknow
www.IIMInternship.com