Pricing a product or service requires considering multiple factors:
1) Understanding customer value and willingness to pay rather than just production costs.
2) Factors like competition, positioning, and supporting marketing mix elements.
3) Achieving company financial goals while fitting market realities.
Product line,Product MIX,Product line pricing,
Product line pricing refers to the practice of reviewing and setting prices for multiple products in coordination with one another.)
It is the process that retailers use to separate goods into various cost categories creating different quality levels in the minds of their customers.
Product line pricing is more effective when there are ample price gaps between each category so that the consumer is well informed of the quality differentials.
Pricing different products within the same product range at different price points.
The greater the features and the benefit obtained the greater the consumer will pay. This form of price discrimination assists the company in maximizing turnover and profits.
Ex: Samsung offering different smart phones with different features at different prices.
This strategy is used for setting the price for entire product line.
In many companies now days develop product line instead of a single product so product line pricing is setting the price on the basis of cost difference between different products in a product line.
Marketer also keeps in mind the customer evolution of different features and also competitive prices.
This document reviews best practice in pricing processes to provide a reference against which current practices and proposals can be tested. Our objectives have been: to research the attributes of world-class pricing through publications and academic sources; to investigate how these attributes are applied in practice to products and services; to assess pricing processes in successful businesses.
In recent years a new attitude toward pricing has emerged. Deregulation and international free trade agreements have increased competition. Price promotion has eroded the power of brand loyalty. Pricing has assumed greater importance to most businesses.
As markets increasingly assume a global dimension, customers can more easily compare prices between one region or country and another, using the internet or a fax machine. They can often locate the same product, or an
acceptable substitute, from another source. Customers are more demanding and fickle, and their expectations increasingly difficult to fulfil.
Price inflation in western economies is now at its lowest for decades. Price increases are no longer accepted without protest from customers, if at all.
The Chairman of General Electric has predicted the onset of the ‘Value Decade’. Global price competition will strengthen because of: reduced product differentiation; global over-capacity for production; significantly diminished trade barriers; efficient information and distribution systems; providing customers with easy access to the prices of suppliers; a growing lack of customers’ loyalty to individual suppliers. Choice will be increasingly driven by price.
This is a challenging scenario that reinforces the need for an integrated strategy and concerted managerial action on pricing.
Pricing processes have lagged behind developments in the market place. They are often characterised by internal conflict between accountants wishing to maximise profit per unit and marketing specialists who seek to maximise
throughput. They are also affected by the potential for strained relations with good customers.
Some companies have downsized their operations to a level where diminishing returns cause them to question the benefits of continuing to focus upon reducing costs. As they switch their attention from cost cutting to adding
value, pricing naturally assumes increased weight in the marketing mix.
We have found many companies reluctant to discuss their own processes.
Some may wish to avoid betraying a lack of sophistication.
Product line,Product MIX,Product line pricing,
Product line pricing refers to the practice of reviewing and setting prices for multiple products in coordination with one another.)
It is the process that retailers use to separate goods into various cost categories creating different quality levels in the minds of their customers.
Product line pricing is more effective when there are ample price gaps between each category so that the consumer is well informed of the quality differentials.
Pricing different products within the same product range at different price points.
The greater the features and the benefit obtained the greater the consumer will pay. This form of price discrimination assists the company in maximizing turnover and profits.
Ex: Samsung offering different smart phones with different features at different prices.
This strategy is used for setting the price for entire product line.
In many companies now days develop product line instead of a single product so product line pricing is setting the price on the basis of cost difference between different products in a product line.
Marketer also keeps in mind the customer evolution of different features and also competitive prices.
This document reviews best practice in pricing processes to provide a reference against which current practices and proposals can be tested. Our objectives have been: to research the attributes of world-class pricing through publications and academic sources; to investigate how these attributes are applied in practice to products and services; to assess pricing processes in successful businesses.
In recent years a new attitude toward pricing has emerged. Deregulation and international free trade agreements have increased competition. Price promotion has eroded the power of brand loyalty. Pricing has assumed greater importance to most businesses.
As markets increasingly assume a global dimension, customers can more easily compare prices between one region or country and another, using the internet or a fax machine. They can often locate the same product, or an
acceptable substitute, from another source. Customers are more demanding and fickle, and their expectations increasingly difficult to fulfil.
Price inflation in western economies is now at its lowest for decades. Price increases are no longer accepted without protest from customers, if at all.
The Chairman of General Electric has predicted the onset of the ‘Value Decade’. Global price competition will strengthen because of: reduced product differentiation; global over-capacity for production; significantly diminished trade barriers; efficient information and distribution systems; providing customers with easy access to the prices of suppliers; a growing lack of customers’ loyalty to individual suppliers. Choice will be increasingly driven by price.
This is a challenging scenario that reinforces the need for an integrated strategy and concerted managerial action on pricing.
Pricing processes have lagged behind developments in the market place. They are often characterised by internal conflict between accountants wishing to maximise profit per unit and marketing specialists who seek to maximise
throughput. They are also affected by the potential for strained relations with good customers.
Some companies have downsized their operations to a level where diminishing returns cause them to question the benefits of continuing to focus upon reducing costs. As they switch their attention from cost cutting to adding
value, pricing naturally assumes increased weight in the marketing mix.
We have found many companies reluctant to discuss their own processes.
Some may wish to avoid betraying a lack of sophistication.
Pricing In Marketing - UNIT-5 & 6-PRICING.pptetebarkhmichale
The law of attraction is the most powerful force in the universe. If you work against it, it can only bring you pain and misery. Successful people know this but have kept it hidden from the lower class for centuries because they did not want to share their wealth. The universal law of attraction is simple. We attract whatever we choose to give our attention to. If we focus on bad things, we will attract more bad things. But the minute you stop focusing on bad and focus on good, you change the pattern and now good things start coming your way.
If we knew the law of attraction and applied it in our lives daily, we would have so much power and control that it would be scary. We could have what we wanted, and when we wanted it. We would have total control of our lives. If you think of yourself as a powerful attractor, you will attract more of what you want in your life, simply by thinking about it, then acting on it. But there is one ingredient you cannot leave out or the law of attraction won't work.
When we think of an object in our mind, we then send that image to our hearts and act on it with emotion. A formula makes this easy to follow: TFAR (Thoughts, Feelings, Actions, and Results) When we take necessary action, the universe shows up and gives us the results we wanted.
The law of attraction works by performing three steps. And these steps must be done for the process to work. These steps are:
1. Getting clear. You must know what it is you want or else you won’t get it. The universe won’t know what you are asking for, so how can it deliver?
2. Vibrate to the level of energy corresponding to what you want. If you want something and you think about it, feel it, and act on it, you must keep that level of energy going until you achieve the results you are after.
3. Attract what you want like a magnet. If you focus on what you want but don’t allow it to come into your life, it won’t. You have to be willing to accept it and acknowledge it. Then when you act, it will occur.
Whatever you do during the course of a day, whatever thoughts you think about, you are attracting. If you use it every day, regularly, and practice it this way, you will eventually find that it becomes a habit that you will subconsciously practice.
You may not believe it, but the steps you need to take are easy. But you must do them, believe in them, and believe in yourself, or they will not work. Are you ready to get tuned into the universe and get clear? Can you work in harmony with the laws of the universe and become successful?
If so here are the steps you need to follow:
1. Get clear. You must know exactly what it is you want. If you are in doubt, vague, or too general, you won’t get anywhere. You must know exactly what it is you want first. Only then will you be able to focus and concentrate on that thought?
2. Visualize what you want and vibrate to it. You must form a mental image in your mind so you can see it as if you had it in your possession. For women, you can do the
Presented by:
- Ji-Hoon Dierckx, CMK Associate Director at Procter & Gamble
Currently leading Gillette Consumer and Market Department for Europe, IMEA and Asia
- Dirk Huisman, Founder and Chairman of SKIM
- John Ashraf, Pricing and Portfolio Director at SKIM
We began by answering a variety of business questions and unraveling the different stakeholders’ perspectives and needs across different industries. As you well know, outcomes and insights are generally discussed across a wider group of stakeholders: finance and operations; marketing, brand, and category managers; and sales, account, or channel management.
What does each of these stakeholders use in order to make a decision, what do they expect in a changing daily reality, how are they using the insights and outcomes, and what do they decide based on the outcomes or based on their mutation of the outcomes? We dug deep into the so what and what’s next questions they will have. In the morning, attendees learned based on active participation in case studies and roleplays.
In the afternoon session, we dug deeper by tackling how to fulfill the needs of your stakeholders and make them happy while sticking to the solidity of the insights. For each issue, we showed how to generate the insights. We nailed down what’s possible and not and what the strengths and weaknesses of the different options are.
At the end of the workshop, we discussed the changing reality of strategic pricing. What’s new, what will change, and what it means for you as an insights professional in the context of generating and using pricing insights. We dug into e-commerce pricing, the mobile reality, and more new trends in pricing.
Price Advantage has written by Baker, Marn, Zawada. This is a book summary presentation which focused on basic concepts and new product pricing methods.
2. Topics
1) Elements of Pricing
2) Approaches
3) What a Price should do
4) Terminology
5) Nine laws of price sensitivity and consumer psychology
6) Methods
1
3. Should
prices
change
in
various
geographical
areas,
referred
to
as
?
How important are customer price sensitivity (e.g. "sticker shock") and elasticity issues?
How much to charge for a product or service?
This question is a typical starting point for discussions about pricing,
however,
a better question for a vendor to ask is
“How much do customers value the products, services, and other intangibles
that the vendor provides.“
Do price points already exist for the product category?
The price floor is determined by production factors like costs (often
only variable costs are taken into account), economies of scale,
marginal cost, and degree of operating leverage
Are there transfer pricing considerations?
How visible should the price be? - Should the price be neutral? (i.e.: not an important differentiating factor),
should it be highly visible? (to help promote a low priced economy product, or to reinforce the prestige image of a quality
product),
or should it be hidden? (so as to allow marketers to generate interest in the product unhindered by price considerations).
Are there joint product pricing considerations?
What sort of payments should be accepted? (cash, check, credit card, barter)
2
4. 3 Levels of approaching to Pricing
• The overall economics of the industry, including
supplier price changes and customer demand
changes
Industry
• The competitive position of the price
in comparison to the value differential of the
product to that of comparative competing products
Market
• Managing the implementation of discounts away
from the reference, or list price, which occur both
on and off the invoice or receipt
Transaction
3
5. Achieve the financial GOALS of the company (i.e. profitability)
Fit the REALITIES of the marketplace (Will customers buy at that price?)
Support a product's Positioning and be consistent with the other variables in
the Marketing Mix
A low cost price can be a for product quality,
effective promotions, or an energetic selling effort by distributors
4
Price is influenced by the type of used,
the type of used,
and the of the product
Price will usually need to be relatively high
if Distribution is expensive,
The product is supported by extensive advertising and
Manufacturing is exclusive
7. “The Strategy and Tactics of Pricing” Book,Thomas Nagle and Reed Holden
1. Reference price effect
2. Difficult comparison effect
3. Switching costs effect
4. Price-quality effect
5. Expenditure effect
6. End-benefit effect
7. Shared-cost effect
8. Fairness effect
9. Framing effect
Price Sensivity By
The product’s price relative to perceived alternatives is higher…
When they don’t have difficulty comparing it to potential alternatives…
The product-specific investment a buyer must make to switch suppliers is little…
Higher prices don’t signal higher quality…
The expense accounts for a large percentage of buyers’ available income or budget…
The effect refers to the relationship a given purchase has to a larger overall benefit
The bigger the portion of the purchase price buyers must pay for themselves…
The price not what they perceive as “fair” or “reasonable” given the purchase context…
when they perceive the price as a loss rather than a forgone gain
when the price is paid separately rather than as part of a bundle.
6
8. Solutions for reducing sensivity or Elasticity
Good
comparison with
alternatives
Information
Ambiguity
Loyalty Programs
Appropriateness
of Q & P
Good Customer
Targeting
Honesty Uniqueness
7
9. 8
1. Cost the limit of price
2. Group buy
3. Options pricing
4. Pay what you want
5. Price elasticity of demand
6. Price system
7. Price umbrella
8. Product life cycle management
9. Product sabotage
10. Psychological pricing
11. Purchasing power
12. Suggested retail price
13. Target pricing
14. Time-based pricing
15. Value pricing