This document discusses pricing concepts and strategies. It begins by asking questions about different types of prices like rent, tuition, and wages. It then covers the role and perception of price from the customer and seller perspectives. Key factors that influence pricing are also outlined, including customers, demand, competition, and costs. The document concludes by describing the multi-step process of setting prices, which involves defining objectives, assessing demand, determining pricing policies and strategies, setting an initial price range, and making tactical pricing adjustments.

1. PRICING

2. Questions to answer
1. What is the price you pay for your apartment?
-rent
2. What is the price you pay for your education?
-tuition
3. What is the price you pay to your doctor or
dentist?
-a fee
4. What is the price you pay to the airline, taxi
and bus companies?
-a fare
5. What is the price you pay for the local services?
-a rate

3. Questions to answer
6.What is the price you pay for the money you borrow?
-charges and interest
7. What is the price you pay for driving your car on a
motorway?
-a toll
. What is the price you pay to the company that insures
you?
-premium
9. What is the price you pay to the guest speaker?
-an honorarium
10. What is the price paid to the government official to
help some character steal?

4. Questions to answer
8-a bribe
11. What is the price collected by the trade union?
-dues
12. What is the price you pay to your regular lawyer to
cover his/her services?
-a retainer
13. What is the price of an executive?
-a salary
14. What is the price of a salesperson?
-a commission
15. What is the price of a worker?
-a wage

5. The role and perception of price
 Price is the value that is placed on
something.
 Price is any common currency of
value to both buyer and seller.
 Price directly generates the
revenues, serves as a
communicator, a bargaining tool and
a competitive weapon.

6. The customer’s perspective
 Price represents the value they attach
to whatever is being exchanged.
 In assessing price, the customer is
looking specifically at the expected
benefits of the products:

7. Functional
Personal Quality
Price
assessment
Financial Operational

8. The seller’s perspective
 Profit = Total revenue – Total cost
 Total revenue = Quantity sold *
Unit price
 Total cost = Production cost +
Marketing cost + Selling cost

9. Psychological effects of price
 Low price = negative statement about
the product’s quality.
 A sudden reduction in price of an
established product = quality has
been compromised.
 High price might actually attract
customers.

10. External influences on pricing
1. Customers and consumers
2. Demand and price elasticity
3. Channels of distribution
4. Competitors
5. Legal and regulatory framework

11. External influences on pricing
1. Customers and
consumers
What the market will tolerate
 The bigger the
area, the more
discretion the
marketer has in COSTS
setting price.

12. External influences on pricing
2. Demand and price elasticity
 Demand determinants
 Changing consumer taste and needs
 Recession
 Competitors’ products and price
 Price elasticity of demand
 Sales respond to price variations: elastic.
 Sales stable after price change: inelastic.

13. External influences on pricing
3. Channels of distribution

14. External influences on pricing
4. Competitors:
 Monopoly: only 1 supplier - rare
 Oligopoly: a small number of powerful
providers dominate the market.
 Monopolistic competition: competitors,
each with differentiated product.
 Perfect competition: competitors, each
with products undistinguishable - rare

15. External influences on pricing
5. Legal and regulatory framework:
 Watchdog bodies

16. Internal influences on pricing
1. Organisational objectives
2. Marketing objectives
3. Costs

17. Internal influences on pricing
1. Organisational objectives
 Corporate strategy: target volume
sales, target value sales, target growth,
target profit figures
 Market leader or niche
 New entrant or established
 Can be both short-term and long-term

18. Internal influences on pricing
2. Marketing objectives
 Focus on specific target markets and
the position desired with them.
 Depends on product’s life cycle:
 Intro. stage: lower price - invite trial
 Growth & early maturity: raise price
 Late maturity & decline: price reduction

19. Internal influences on pricing
3. Costs
 Total costs include:
 Operating and
 Servicing costs
 A product’s selling price generally
represents:
 Its total cost (unit cost plus overheads), &
 Profit or “risk reward”

20. The process of price setting
Pricing Demand
Pricing policies Setting the Pricing tactics
objectives assessment
& strategies price range & adjustments

21. 1. Pricing objectives
 Financial objectives: short/long-term
 Sales and marketing objectives
 Market share and positioning
 Volume sales
 Status quo: preserve the status quo –
happy with current situation
 Price war (undercutting), price matching,
improve product / service / communication
 Survival

22. 2. Demand assessment
 Marketers need to assess demand
levels for a product at any given price.
 This involves a great deal of
managerial skills as there are many
variables.

23. 3. Pricing policies and strategies
 New product pricing strategies
 Price skimming: high price, then lower
 Penetration pricing: low price, then high up
 Product mix pricing strategies:
 A product range starts with basic products,
then price steps up with additional features
 Managing price changes:
 Price are not static because of competitive
pressure, Cost inflation, new opportunities

24. 4. Setting the price range
 The cost-volume-profit relationship
 Fixed costs
 Variable costs
 Marginal costs
 Total costs
 Setting the price range
 Cost-based method
 Demand-based method
 Competition-based method

25. The cost-volume-profit
relationship
 Fixed costs: do not vary with output in
the short term (salaries, rent, etc.)
 Variable costs: vary according to the
quantity produced (raw materials, etc.)
 Marginal costs: change that occurs to
total cost if 1 more unit is added
 Total costs: all the cost incurred
 Breakeven analysis: the point at which
total revenue = total cost

26. A. Cost-based methods
 Mark-up price = costs + profit
(giá cộng lời vào vốn)
 Cost-plus pricing = costs + fix %
(định giá có lãi)
 Experience curve pricing (định giá
theo đường cong kinh nghiệm)

27. B. Demand-based pricing
 When demand is strong, the price goes
up; when it is weak, the price goes down.
 Need a good understanding of the nature
and elasticity of demand.
 Psychological pricing: customer-based
 Rely on the consumer’s emotive responses,
subjective assessments and feelings.
 Applicable to higher involvement products.

28. C. Competition-based pricing
 Depends on:
 The structure of the market
 The product’s perceived value in the market
 Can be:
 Cost-leader with price-oriented approach
 Price-follower bases on the going-rate for
the product

29. 5. Pricing tactics and adjustments
 Price can vary to reflect specific
customer needs, the market position.
 Marketers should set up a framework
for pricing discretion.
 Special adjustments can be made for
short-term promotional purposes
 Discounts, allowances, trade-in
 Zoned pricing: single, multiple zones

30. Thank you very much!!!