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Price Analysis
- 1. WeekWeek 66WeekWeek 66 Price AnalysisPrice AnalysisPrice AnalysisPrice AnalysisPrice AnalysisPrice Analysis Hospitality Marketing Nur Agustinus Hospitality Marketing Nur Agustinus
- 2. PRICING PERCPECTIVES– Lancecter-Reynolds - • ECONOMIST’s approach The price is the means through which supply and demand is brought into equilibrium • ACCOUNTANTS’s approach The price covers the costs and make profits • MARKETER’s approach Effect of price on the organisation’s competitive market position • ECONOMIST’s approach The price is the means through which supply and demand is brought into equilibrium • ACCOUNTANTS’s approach The price covers the costs and make profits • MARKETER’s approach Effect of price on the organisation’s competitive market position • ECONOMIST’s approach The price is the means through which supply and demand is brought into equilibrium • ACCOUNTANTS’s approach The price covers the costs and make profits • MARKETER’s approach Effect of price on the organisation’s competitive market position • ECONOMIST’s approach The price is the means through which supply and demand is brought into equilibrium • ACCOUNTANTS’s approach The price covers the costs and make profits • MARKETER’s approach Effect of price on the organisation’s competitive market position • ECONOMIST’s approach The price is the means through which supply and demand is brought into equilibrium • ACCOUNTANTS’s approach The price covers the costs and make profits • MARKETER’s approach Effect of price on the organisation’s competitive market position
- 4. Setting the Right PriceSetting the Right PriceSetting the Right PriceSetting the Right Price
- 5. Steps in Setting the Right PriceSteps in Setting the Right PriceSteps in Setting the Right PriceSteps in Setting the Right Price Establish pricing goalsEstablish pricing goals Estimate demand, costs, and profitsEstimate demand, costs, and profits Establish pricing goalsEstablish pricing goals Choose a price strategyChoose a price strategy Estimate demand, costs, and profitsEstimate demand, costs, and profits Fine tune with pricing tacticsFine tune with pricing tactics Choose a price strategyChoose a price strategy Results lead to the right price Fine tune with pricing tactics
- 6. Setting the Right PriceSetting the Right PriceSetting the Right PriceSetting the Right Price
- 8. Choose a Price StrategyChoose a Price Strategy Price Skimming Price Skimming A firm charges a high introductory price, often coupled with heavy promotion. A firm charges a high introductory price, often coupled with heavy promotion. Price Skimming Price Skimming Penetration Pricing A firm charges a high introductory price, often coupled with heavy promotion. A firm charges a high introductory price, often coupled with heavy promotion. A firm charges a relatively low price for a product initially as a way to reach the mass market. A firm charges a relatively low price for a product initially as a way to reach the mass market. Penetration Pricing Penetration Pricing A firm charges a relatively low price for a product initially as a way to reach the mass market. A firm charges a relatively low price for a product initially as a way to reach the mass market. Status Quo Pricing Status Quo Pricing Penetration Pricing Charging a price identical to or very close to the competition’s price. Charging a price identical to or very close to the competition’s price. A firm charges a relatively low price for a product initially as a way to reach the mass market. Status Quo Pricing Status Quo Pricing Charging a price identical to or very close to the competition’s price. Charging a price identical to or very close to the competition’s price. 8
- 9. Price SkimmingPrice SkimmingPrice SkimmingPrice Skimming Inelastic Demand SituationsSituations whenwhen PricePrice SkimmingSkimming isis SuccessfulSuccessful SituationsSituations whenwhen PricePrice SkimmingSkimming isis SuccessfulSuccessful Superior Product Inelastic Demand SituationsSituations whenwhen PricePrice SkimmingSkimming isis SuccessfulSuccessful SituationsSituations whenwhen PricePrice SkimmingSkimming isis SuccessfulSuccessful Superior Product Legal Protection of Product SituationsSituations whenwhen PricePrice SkimmingSkimming isis SuccessfulSuccessful SituationsSituations whenwhen PricePrice SkimmingSkimming isis SuccessfulSuccessful Legal Protection of Product Technological Breakthrough SituationsSituations whenwhen PricePrice SkimmingSkimming isis SuccessfulSuccessful SituationsSituations whenwhen PricePrice SkimmingSkimming isis SuccessfulSuccessful Limited Production Technological Breakthrough Limited Production
- 10. Penetration PricingPenetration PricingPenetration PricingPenetration Pricing AdvantagesAdvantagesAdvantagesAdvantages DisadvantagesDisadvantagesDisadvantagesDisadvantagesAdvantagesAdvantagesAdvantagesAdvantages Discourages or blocks competition from market entry DisadvantagesDisadvantagesDisadvantagesDisadvantages Requires gear up for mass production Selling large volumes at low prices Strategy to gain market share may fail Discourages or blocks competition from market entry Requires gear up for mass production Selling large volumes at low prices Strategy to gain market share may fail Discourages or blocks competition from market entry Requires gear up for mass production Selling large volumes at low prices Strategy to gain market share may fail Requires gear up for mass production Selling large volumes at low prices Strategy to gain market share may fail
- 11. Status Quo PricingStatus Quo PricingStatus Quo PricingStatus Quo Pricing AdvantagesAdvantagesAdvantagesAdvantages DisadvantagesDisadvantagesDisadvantagesDisadvantagesAdvantagesAdvantagesAdvantagesAdvantages Simplicity Safest route to long- term survival for small firms DisadvantagesDisadvantagesDisadvantagesDisadvantages Strategy may ignore demand or cost Simplicity Safest route to long- term survival for small firms Strategy may ignore demand or cost Simplicity Safest route to long- term survival for small firms Simplicity Safest route to long- term survival for small firms
- 12. The Legality and Ethics of Price Strategy The Legality and Ethics of Price Strategy Unfair Trade Practices Unfair Trade Practices Laws that prohibit wholesalers and retailers from selling below cost. Laws that prohibit wholesalers and retailers from selling below cost. Unfair Trade Practices Unfair Trade Practices Laws that prohibit wholesalers and retailers from selling below cost. Laws that prohibit wholesalers and retailers from selling below cost. Price Fixing An agreement between two or more firms on the price they will charge for a product. An agreement between two or more firms on the price they will charge for a product. Price Fixing Price Fixing An agreement between two or more firms on the price they will charge for a product. An agreement between two or more firms on the price they will charge for a product. Price Fixing An agreement between two or more firms on the price they will charge for a product. An agreement between two or more firms on the price they will charge for a product.
- 13. Predatory PricingPredatory Pricing Predatory Pricing Predatory Pricing Predatory Pricing The practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market. Predatory Pricing Predatory Pricing The practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market. The practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market. 13
- 17. Tactics for FineTactics for Fine--TuningTuning the Base Pricethe Base Price Tactics for FineTactics for Fine--TuningTuning the Base Pricethe Base Price CommonCommon TacticsTactics forfor FineFine--TuningTuning the Base Pricethe Base Price Quantity DiscountsQuantity Discounts CommonCommon TacticsTactics forfor FineFine--TuningTuning the Base Pricethe Base Price Quantity DiscountsQuantity Discounts Cash DiscountsCash Discounts Functional DiscountsFunctional Discounts CommonCommon TacticsTactics forfor FineFine--TuningTuning the Base Pricethe Base Price Functional DiscountsFunctional Discounts Seasonal DiscountsSeasonal Discounts CommonCommon TacticsTactics forfor FineFine--TuningTuning the Base Pricethe Base Price CommonCommon TacticsTactics forfor FineFine--TuningTuning the Base Pricethe Base Price Seasonal Discounts Promotional AllowancesPromotional Allowances RebatesRebates CommonCommon TacticsTactics forfor FineFine--TuningTuning the Base Pricethe Base Price CommonCommon TacticsTactics forfor FineFine--TuningTuning the Base Pricethe Base Price RebatesRebates Value-Based PricingValue-Based Pricing CommonCommon TacticsTactics forfor FineFine--TuningTuning the Base Pricethe Base Price Value-Based Pricing
- 18. Tactics for FineTactics for Fine--TuningTuning the Base Pricethe Base Price Tactics for FineTactics for Fine--TuningTuning the Base Pricethe Base Price FineFine--TuningTuning PricingPricing TacticsTactics Discounts FineFine--TuningTuning PricingPricing TacticsTactics FineFine--TuningTuning PricingPricing TacticsTactics DiscountsDiscounts FineFine--TuningTuning PricingPricing TacticsTactics FineFine--TuningTuning PricingPricing TacticsTactics Geographic PricingGeographic Pricing FineFine--TuningTuning PricingPricing TacticsTactics FineFine--TuningTuning PricingPricing TacticsTactics Special Pricing Tactics Special Pricing Tactics Geographic Pricing FineFine--TuningTuning PricingPricing TacticsTactics Special Pricing Tactics Special Pricing Tactics
- 20. Economic EnvironmentEconomic Environment Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. A recession is a significant decline in economic activity that goes on for more than a few months. Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. A recession is a significant decline in economic activity that goes on for more than a few months. Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.
- 21. InflationInflation Cost-Oriented TacticsCost-Oriented Tactics High Inflation Cost-Oriented TacticsCost-Oriented Tactics High InflationHigh InflationHigh Inflation Demand-Oriented TacticsDemand-Oriented Tactics High Inflation 21
- 23. Cost-Oriented TacticsCost-Oriented Tactics Problems with CostProblems with Cost--Oriented TacticsOriented Tactics A high volume of sales on an item with a low profit margin may still make the item highly profitable. Eliminating a product may reduce economies of scale. Eliminating a product may affect the price-quality image of the entire line. Problems with CostProblems with Cost--Oriented TacticsOriented Tactics A high volume of sales on an item with a low profit margin may still make the item highly profitable. Eliminating a product may reduce economies of scale. Eliminating a product may affect the price-quality image of the entire line. Problems with CostProblems with Cost--Oriented TacticsOriented Tactics A high volume of sales on an item with a low profit margin may still make the item highly profitable. Eliminating a product may reduce economies of scale. Eliminating a product may affect the price-quality image of the entire line. A high volume of sales on an item with a low profit margin may still make the item highly profitable. Eliminating a product may reduce economies of scale. Eliminating a product may affect the price-quality image of the entire line. 23
- 24. Demand-Oriented TacticsDemand-Oriented Tactics Cultivate selected demandCultivate selected demand Strategies to Make Demand More Inelastic Strategies to Make Demand More Inelastic Cultivate selected demandCultivate selected demand Create unique offeringsCreate unique offeringsStrategies to Make Demand More Inelastic Strategies to Make Demand More Inelastic Create unique offeringsCreate unique offerings Change the package design Strategies to Make Demand More Inelastic Strategies to Make Demand More Inelastic Change the package designChange the package design Heighten buyer dependenceHeighten buyer dependence
- 25. RecessionRecession Value-Based PricingValue-Based Pricing Bundling or UnbundlingBundling or Unbundling
- 27. BundlingBundling
- 30. Assignment • Watch a movie: MADRE • Link: https://www.youtube.com/watch?v=4XK23tEMu5s • Write a reflective journal after watching the film. – Write your response about experiences and opinions after watching the film. – Write your thoughts and feelings. – Write what you learned from the film. • Watch a movie: MADRE • Link: https://www.youtube.com/watch?v=4XK23tEMu5s • Write a reflective journal after watching the film. – Write your response about experiences and opinions after watching the film. – Write your thoughts and feelings. – Write what you learned from the film. • Watch a movie: MADRE • Link: https://www.youtube.com/watch?v=4XK23tEMu5s • Write a reflective journal after watching the film. – Write your response about experiences and opinions after watching the film. – Write your thoughts and feelings. – Write what you learned from the film. • Watch a movie: MADRE • Link: https://www.youtube.com/watch?v=4XK23tEMu5s • Write a reflective journal after watching the film. – Write your response about experiences and opinions after watching the film. – Write your thoughts and feelings. – Write what you learned from the film. • Watch a movie: MADRE • Link: https://www.youtube.com/watch?v=4XK23tEMu5s • Write a reflective journal after watching the film. – Write your response about experiences and opinions after watching the film. – Write your thoughts and feelings. – Write what you learned from the film.