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PRICING
STRATEGIES
BSBA HRM 1B
MARKETING MANAGEMENT
01 Discuss the five major objectives of pricing
02
03 Outline the approaches to geographical pricing
OBJECTIVES
Determine the price setting methods
INTRODUCTION
The company first decides
where it wants to position its market
offering. The clearer a firm’s objectives, the
easier it is to set price.
A price is an expression of
value.
Five major
objectives
through
pricing
 Survival ness
 Maximum current profit
 Maximum market share
 Maximum market skimming
 Product-quality leadership
PRICE
SETTING
METHODS
Market pricing
The market price is the current
price at which an asset or service
can be bought or sold.
Cost pricing
The most elementary pricing
method is to add standard markup
to the cost of the product.
Construction companies omit job
bids by estimating the total project
cost and adding a standard
markup for profit
EXAMPLE
SELLING PRICE= UNIT COST+ (COST PER UNIT*MARK UP PER UNIT COST)
=30+ (30*.20)
=30+6
=P 36
GIVEN:
UNIT COST: 30
PROFIT MARGIN: 20%
Target return pricing
Another cost oriented pricing
approach is target return pricing.
The firm tries to determine the
price that is at would yield the
target rate of return on investment.
EXAMPLE
ROI= 5,000,000*.20 =1,000,000
COST PER UNIT= VARIABLE COST+FIXED COST
= 100+(500,000/10,000 UNITS)
=100+50
=150
TARGET RETURN PER UNIT=1,000,000/10,000= 100
SELLING PRICE PER UNIT= COST OF PRODUCT+ROI
=150+100
= P250
GIVEN:
INVESTMENT: 5,000,000
UNITS:10,000
VARIABLE COST: 100
FIXED COST:500,000
ROI: 20%
Perceived value pricing
It fits in well with modern product
positioning thinking. The key to
perceive value pricing is to
accuracy determine the market’s
perception of the offer is value.
Going rate pricing
In going rate pricing, the firm
bases its rice largely on
competitors prices, with less
attention aid to its own cost or
demand. The firm might change
the same, more or less than its
major competitors.
Sealed- bid pricing
Competitive oriented pricing also
dominates where firms bid for
jobs. The firm bases its price on
expectations of who competitors
will rice rather than on a rigid
relation to the firm a costs or
demand
Geographical pricing
involves company in
deciding how to price its
products to customers
located in different parts of
the country
DIFFERENT
APPROACHES
TO
GEOGRAPHICAL
PRICING
STRATEGY
FOB-origin pricing
the shipping cost from the factory
or warehouse is paid by the
purchaser.
Uniform
delivered
pricing
the seller charges the
same price to all buyers,
inclusive of delivery.
Basing-point pricing
a system in which a buyer must
pay the price for a product
inclusive of freight costs,
irrespective of the seller's location.
Freight-
absorption
pricing
the seller absorbs all or
part of the freight charges
to get the desired
business.
Zone pricing
is a pricing method in which
consumers within one zone are
charged one price.
CONCLUSION
REFERENCES
Cornelisse, S. (2023, January 17). Understanding Pricing Objectives and Strategies for the Value-Added
Ag Producer. Penn State Extension. Retrieved June 29, 2023, from
https://extension.psu.edu/understanding-pricing-objectives-and-strategies-for-the-value-added-ag-
producer
Horton, S. (n.d.). Marketing Decisions Pricing Strategies - ppt download. SlidePlayer. Retrieved June 29,
2023, from https://slideplayer.com/slide/15367432/
Marketing Management Lecture Notes Study Material Online. (n.d.). BrainKart. Retrieved June 29, 2023,
from https://arts.brainkart.com/subject/marketing-management-7/
Top 6 Pricing Methods (Price Setting Methods). (n.d.). Your Article Library. Retrieved June 29, 2023,
from https://www.yourarticlelibrary.com/economics/pricing-economics/top-6-pricing-methods-price-
setting-methods/48636
THANK YOU FOR
WATCHING

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MM FINALS.pptx

  • 2. 01 Discuss the five major objectives of pricing 02 03 Outline the approaches to geographical pricing OBJECTIVES Determine the price setting methods
  • 3. INTRODUCTION The company first decides where it wants to position its market offering. The clearer a firm’s objectives, the easier it is to set price. A price is an expression of value.
  • 5.  Survival ness  Maximum current profit  Maximum market share  Maximum market skimming  Product-quality leadership
  • 7. Market pricing The market price is the current price at which an asset or service can be bought or sold.
  • 8. Cost pricing The most elementary pricing method is to add standard markup to the cost of the product. Construction companies omit job bids by estimating the total project cost and adding a standard markup for profit
  • 9. EXAMPLE SELLING PRICE= UNIT COST+ (COST PER UNIT*MARK UP PER UNIT COST) =30+ (30*.20) =30+6 =P 36 GIVEN: UNIT COST: 30 PROFIT MARGIN: 20%
  • 10. Target return pricing Another cost oriented pricing approach is target return pricing. The firm tries to determine the price that is at would yield the target rate of return on investment.
  • 11. EXAMPLE ROI= 5,000,000*.20 =1,000,000 COST PER UNIT= VARIABLE COST+FIXED COST = 100+(500,000/10,000 UNITS) =100+50 =150 TARGET RETURN PER UNIT=1,000,000/10,000= 100 SELLING PRICE PER UNIT= COST OF PRODUCT+ROI =150+100 = P250 GIVEN: INVESTMENT: 5,000,000 UNITS:10,000 VARIABLE COST: 100 FIXED COST:500,000 ROI: 20%
  • 12. Perceived value pricing It fits in well with modern product positioning thinking. The key to perceive value pricing is to accuracy determine the market’s perception of the offer is value.
  • 13. Going rate pricing In going rate pricing, the firm bases its rice largely on competitors prices, with less attention aid to its own cost or demand. The firm might change the same, more or less than its major competitors.
  • 14. Sealed- bid pricing Competitive oriented pricing also dominates where firms bid for jobs. The firm bases its price on expectations of who competitors will rice rather than on a rigid relation to the firm a costs or demand
  • 15. Geographical pricing involves company in deciding how to price its products to customers located in different parts of the country
  • 17. FOB-origin pricing the shipping cost from the factory or warehouse is paid by the purchaser.
  • 18. Uniform delivered pricing the seller charges the same price to all buyers, inclusive of delivery.
  • 19. Basing-point pricing a system in which a buyer must pay the price for a product inclusive of freight costs, irrespective of the seller's location.
  • 20. Freight- absorption pricing the seller absorbs all or part of the freight charges to get the desired business.
  • 21. Zone pricing is a pricing method in which consumers within one zone are charged one price.
  • 23. REFERENCES Cornelisse, S. (2023, January 17). Understanding Pricing Objectives and Strategies for the Value-Added Ag Producer. Penn State Extension. Retrieved June 29, 2023, from https://extension.psu.edu/understanding-pricing-objectives-and-strategies-for-the-value-added-ag- producer Horton, S. (n.d.). Marketing Decisions Pricing Strategies - ppt download. SlidePlayer. Retrieved June 29, 2023, from https://slideplayer.com/slide/15367432/ Marketing Management Lecture Notes Study Material Online. (n.d.). BrainKart. Retrieved June 29, 2023, from https://arts.brainkart.com/subject/marketing-management-7/ Top 6 Pricing Methods (Price Setting Methods). (n.d.). Your Article Library. Retrieved June 29, 2023, from https://www.yourarticlelibrary.com/economics/pricing-economics/top-6-pricing-methods-price- setting-methods/48636