التسويق الحديد الجديث الالقبلغلت لبتل .pptx

Chapter 10
Pricing: Understanding and
Capturing Customer Value

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
10-1 Answer the question “What is a price?” and discuss the importance of pricing
in today’s fast-changing environment.
10-2 Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and
competitor strategies when setting prices.
10-3 Identify and define the other important external and internal factors
affecting a firm’s pricing decisions.
Learning Objectives

What Is a Price
?
Price is the amount of money charged for a product or service.
It is the total of all the values that consumers give up in order
to gain the benefits of having or using a product or service
.
Price is the only element in the marketing mix that produces revenue;
all other elements represent costs.
Price is also one of the most flexible marketing mix elements; prices can be changed
quickly. Smart managers treat pricing as a key strategic tool for creating customer
value and building customer relationships
.

4
Understanding Pricing
• Pricing in a digital world
 Get immediate sellers price comparisons
 Check prices at the point of purchase
 Set your price and make it meet the
customer's expectations
 Monitor customer behavior & provide offers
 Give customers access to special prices
 Negotiate prices online or even in personally

5
Understanding Pricing
• Understanding Pricing
Price is not just a number. It comes in many forms and performs many
functions. Rent, tuition, wages, fees, rates, and commissions are all the
price you pay for some good or service. Price also has many
components. If you buy a new car, the sticker price may be adjusted by
Discounts and dealer incentives.

Major Pricing Strategies
Customer Value-Based Pricing
• Pricing decisions are complex and must take into account many factors
—the company, the customers, the competition, and the marketing
environment. Marketers know their pricing decisions must also be
regular with the firm’s marketing strategy and its target market.

Customer Value-Based Pricing
Good-value pricing is offering
just the right combination of
quality and good service at a fair
price.
Everyday low pricing (EDLP)
involves charging a continuing
everyday low price with few or no
temporary price discounts
.
High-low pricing involves charging
higher prices on an everyday basis
but running frequent promotions
to lower prices temporarily on
selected items
.
Value-added pricing attaches value-
added features and services to
differentiate the companies offers
and thus their higher prices
.

This value created by the product, distribution, and promotion elements
of the marketing will be known as the product’s Value To the
Customer (VTC).
Steps to Estimate the Value to the Customer
1. Identify the price of the competing product that the customer views
as the best substitute. This is the reference value.
2. Identify all factors that differentiate your product from this competing
product. These are the differentiating factors.
Estimating the Value to the Customer

Example: A homeowner has asked a local real property agent for advise on
the price he should set for his house. The real property agent notes
that the only comparable house in the neighborhood that is currently
for sale is asking $350,000. both houses are on a hill that overlooks a
beautiful lake, but the owner’s house is forty feet farther up the hill
than the comparable house. The agent guess that, in this area,
customers will pay an additional $10,000 for a house for each ten
added feet of elevation related with the house’s location. The owner’s
house an old-fashioned kitchen, but the sellers of the comparable
house have just spent $24,000 to remodel their kitchen.
What is the selling price that the real property agent should
recommend?
Estimating the Value to the Customer

Cost-Based Pricing
Cost-based pricing sets prices based
on the costs for producing,
distributing, and selling the product
plus a fair rate of return for effort and
risk
.
Fixed costs are the costs that do not
vary with production or sales level.
•Rent
•Executive salaries
Variable costs vary directly with the
level of production.
• Raw materials
• Packaging
Total costs are the total of the fixed
and variable costs for any given level
of production.

Marketing argument
Is the Right Price a Fair Price?
Take a position: Prices should reflect the value that
consumers are willing to pay.

Competition-Based Pricing
Competition-based pricing is setting prices based
on competitors’ strategies, costs, prices, and market
offerings
.

Other Internal and External Considerations
Affecting Price Decisions
Comprehensive Marketing Strategy, Objectives, and Mix
Price decisions must be coordinated with product
design, distribution, and promotion decisions to form a
regular and effective mixed marketing program.
Target costing starts with an perfect
selling price based on consumer value
considerations and then targets costs
that will ensure that the price is met.

Other Internal and External Considerations
Affecting Price Decisions
Organizational Considerations
• Who should set prices?
• Who can influence prices?

• How companies price
– Small companies: boss
– Large companies: Department /product line managers
• How companies should price
– Understanding of consumer pricing psychology
– a systematic approach to setting, adapting, and changing
prices
Who should set prices?

• Possible Consumer Reference Prices
“Fair Price” (what consumers feel the product should cost)
• • Typical or regular Price
• • Last Price Paid
• • price or the maximum most consumers would pay)
• • Lower-price or the minimum most consumers would pay)
• • Competitor Prices
• • Expected Future Price
• • Usual Discounted Price
Reference prices

• Price-Quality Conclusion Many consumers use price as an
indicator of quality. Image pricing is especially effective with
ego-sensitive products such as perfumes, expensive cars, and
designer clothing. A $100 bottle of perfume might contain $10
worth of scent, but gift givers pay $100 to communicate their
high regard for the receiver.
Price-quality conclusion

• Price endings Many sellers believe prices should end in an odd or
singular number. Customers perceive an item priced at $299 to be in
the $200 rather than the $300 range, Price encoding in this fashion is
important Another explanation for the popularity of “9” endings is
that they suggest a discount or bargain, so if a company wants a high-
price image, it should probably avoid the odd-ending.
Price Endings

• One study showed that demand actually increased by 30%
when the price of a dress raise from $34 to $39 but was
unchanged when it raise from $34 to $44.26 Prices that end
with 0 are also popular.
Price Endings

• Each price will lead to a different level of demand and have
a different impact on a company’s marketing objectives. The
higher price, the lower demand.
Determining Demand

Other Considerations Affecting Price Decisions
The Market and Demand
Before setting prices, the marketer must understand the relationship
between price and demand for its products
.

• Generally, customers whom they are less price sensitive to low-cost
items or items they buy infrequently. They are also less price sensitive
when (1) there are few or no substitutes or competitors; (2) they do
not easily notice the higher price; (3) they are slow to change their
buying habits; (4) they think the higher prices are justified; and (5)
price is only a small part of the total cost of obtaining, operating, and
servicing the product over its lifetime.
Price sensitivity

• The product is more special.
• Buyers are less aware of substitutes.
• Buyers cannot easily compare the quality of substitutes.
• The expenses is a little part of the buyer’s total income.
• The expenses is small compared to the total cost of the end product.
• Part of the cost is hold out by another party.
•The product is assumed to have more quality, prestige, or
exclusiveness.
Factors that reduce price sensitivity

• Of course, companies prefer customers who are less price-
sensitive.
Price sensitivity

• Firm must take competitors’ costs, prices, &
reactions into account
Analyzing Competitors’ Prices

• The Company should first consider the nearest competitor’s price. If
the firm’s offer features not offered by the nearest competitor, their
worth to the customer should be evaluated, If the competitor’s offer
some features not offered by the firm, their worth to the customer
should be evaluated and remove from the firm’s price. Now the firm
can decide whether it can charge more, the same, or less than the
competitor. But competitors can change their prices in reaction to the
price set by the firm.
Analyzing Competitors’ Prices

• Airlines generate billions of dollars
in baggage fees as a source of extra
income. or Some company earn a
lots from the cheap price product but
with very expensive parts which also
short run remain.
Stealth price increases

1. Discount: A price reduction to buyers who pay bills
immediately. A regular example is which means payment is
due within 30 days and the buyer can deduct 2 percent by
paying within 10 days.
Price discounts and allowances

2. Quantity Discount: A price reduction to those who buy large
volumes. Quantity discounts must be offered equally to all customers
3. Seasonal Discount: A price reduction to those who buy goods or
services out of season. Hotels, and airlines offer seasonal discounts in
slow selling periods.
Price discounts and allowances

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