Pricing considerations strategies
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Pricing considerations strategies
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Pricing considerations strategies
- 9. General Pricing Approaches Figure 10-5 Product Cost Price Value Customers Cost-based Pricing Customers Value Price Cost Product Value-based Pricing
- 13. Cost-Based Pricing Approaches Figure 10-4
- 18. Has competitor cut price? Will lower price negatively affect our market share & profits? Can/should effective action be taken? Hold current price; continue to monitor competitor’s price Reduce price Raise perceived quality Improve quality & increase price Launch low-price “ fighting brand” Yes No No No Responding to Competitor’s Price Changes Yes Yes Figure 10-6
- 34. Campaign evaluation Communication impact Sales impact Message decisions Message strategy Message execution Budget decisions Affordable approach Percent of sales Competitive parity Objective and task Objectives setting Communication objectives Sales objectives Media decisions Reach, frequency, impact Major media types Specific media vehicles Media timing Major Advertising Decisions Figure 13-3
- 39. Premium lager with essence of guarana, a natural source of caffeine
Editor's Notes
- Hand out article “ Don’t leave money behind” Marketing May 31 2004 12,4,8
- Pricing strat largely related to positioning e.g. Motel 6 versus Sheraton Pure competition- many buyers and sellers – commodity product – whet Monopolistics – many buyers and sellers but differentiated products and price ranges Oligopolostic – only a few sellers – sensitive to each others pricing strategies – car companies Explain the pricing objectives – Non profits may have objectives like partial cost recovery or a social price geared to its clients A marketing mix strategy where plan is to be a price positioning then need to work to a target cost – that is what Swtch did
- Costs set the floor on pricing
- Hand out assignment 5 and do question 1
- Used primarily by Wal-Mart, it encourages more one-stop shopping by building trust
- A !% increase can turn into a 12% increase in profitability. But can’t nickel and dime customers – must give value so they are happy to pay a little more
- Price cuts – why? Excess capacity Falling share in face of competitive pricing cuts – airlines Price increases – if a company’s profit margin is 3% of sales , a 1% price increase can increase profits by 33% if sales volume unaffected - need to cover cost inflation Can raise prices a number of ways – Invisibly - dropping discounts,, find ways to meet higher costs without a price increase -less volume in the package, eliminating features, unbundled How should a firm respond to a price change by a competitor? - estimate why they are doing it Is it temporary What will happen if you don’t respond Will the other players respond
- Mass markets have fragmented into many smaller pieces Marketers have switched their efforts to be more focused on developing relationships with narrow segments Improvements in communications technology have enabled more segmented marketing Market fragmentation has led to media fragmentation
- The basis for building a relationship with buyers, by solving problems and creating value Most expensive on a per-contact basis Requires long-term commitment and ongoing management
- Sales promotion tools generate results now versus later Effectiveness of tools is easier to track than advertising Overuse of sales promotion tools may detract from brand equity and customer loyalty
- More cost efficient way to get message across Can be difficult to control Can be proactive and reactive
- At which stage of the product life cycle would you use informative, persuasive or reminder advertising?