SlideShare a Scribd company logo
SETTING THE PRICE
Variations of brands for different
price points
MARIOTT HOTELS
Steps in Setting a Pricing Policy
Step 1:Selecting The Pricing Objective
Survival
Maximum Current
Profit
Maximum Market
Share
Maximum Market
Skimming
Product Quality Leadership
Step 2:Determining Demand
Price Sensitivity
Price Elasticity
Estimating Demand Curves
Surveys
Price Experiments
Statistical Analysis
Step 3:
Accumulated Production
-decline with the
average cost
Target Costing
-concentrated effort by
engineers & designers
to achieve a particular
reduced cost
Step 4:Analyzing Competitor’s Costs, Prices,&
Offers
Anticipating Competitor’s reactions
-Assuming standard way to a price change
-Considering each change a fresh-new
challenge
Step 5:Selecting a Pricing method
Markup pricing
Target-return pricing
Perceived Value Pricing
Value Pricing
Going-rate Pricing
Auction-type Pricing
English auctions (ascending bids)
Dutch auctions(descending bids)
Sealed-bid auctions
Step 6:Selecting The Final
Price
Gain & Risk Sharing pricing
Impact of Price on other parties
Created by
Subhasis Panda, IIT Bombay,
during an internship by
Prof.Sameer Mathur, IIM Lucknow
www.IIMInternship.com

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How should acompany set prices initially for products or services