This document discusses various aspects of pricing strategies. It defines price as the amount of money charged for a product or service. It then discusses different types of pricing strategies such as customer value-based pricing, good value pricing, value-added pricing, cost-based pricing including cost-plus pricing and break-even pricing, and competition-based pricing. It also discusses internal factors like costs and objectives and external factors like demand, competition, and regulations that affect pricing decisions.
2. Price
Price is the amount of money charged for a
product or a service.
Price is the money paid for the value of a product
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4. Price
Price is the sum of all the values that customers
give up to gain the benefits of having or using a
product or service
Philip Kotler
Price is the amount of money and or other items
with utility needed to acquire a product.
Stanton
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5. Price
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.
Price has been the major factor affecting buyer
choice
Price determine a firm’s market share and
profitability
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6. Price
Price plays a key role in creating customer value
and building customer relationships
Smart managers treat pricing as a key strategic
tool for creating and capturing customer value
A small percentage improvement in price can
generate a large percentage increase in
profitability
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7. Major Pricing Strategies
Customer value based pricing
Good value pricing
Value added pricing
Other pricing strategies
Cost based pricing
Competition based Pricing
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8. Customer Value Based Pricing
Customer value–based pricing uses buyers’
perceptions of value as the key to pricing.
Value-based pricing means that the marketer
cannot design a product and marketing program
and then set the price.
Price is considered along with all other marketing
mix variables before the marketing program is set.
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9. Customer Value Based Pricing
Assess customer needs and value perceptions
Set target price to match customer perceived value
Determine costs that can be incurred
Design product to deliver desired value at target
price
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10. Customer Value Based Pricing
Good-value pricing
Value added pricing
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11. Good Value Pricing
The Great Recession of 2008 to 2009 caused a
fundamental and lasting shift in consumer attitudes
toward price and quality.
In response, many companies have changed their
pricing approaches to bring them in line with changing
economic conditions and consumer price perceptions.
More and more, marketers have adopted the strategy
of good-value pricing—offering the right combination
of quality and good service at a fair price.
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12. Good Value Pricing
In many cases, this has involved introducing less-
expensive versions of established brand name
products or new lower-price lines.
An important type of good-value pricing at the
retail level is called everyday low pricing (EDLP).
EDLP involves charging a constant, everyday low
price with few or no temporary price discounts.
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13. Good Value Pricing
In contrast, high-low pricing involves charging
higher prices on an everyday basis but running
frequent promotions to lower prices temporarily
on selected items.
Eg. Daraj 11.11 sales
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14. Value Added Pricing
Value-based pricing doesn’t mean simply
charging what customers want to pay or setting
low prices to meet competition.
Instead, many companies adopt value-added
pricing strategies.
Rather than cutting prices to match competitors,
they add quality, services, and value-added
features to differentiate their offers and thus
support their higher prices.
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15. Cost Based Pricing
Whereas customer value perceptions set the price
ceiling, costs set the floor for the price that the
company can charge.
Cost-based pricing involves setting prices based
on the costs of producing, distributing, and selling
the product plus a fair rate of return for the
company’s effort and risk.
A company’s costs may be an important element
in its pricing strategy
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16. Break Even or Target Profit
Pricing
Break even pricing is the practice of setting a price
point at which a business will earn zero profits on
a sale.
Break even point is no profit – no loss point
BEP = Fixed cost/ contribution margin per unit
BEP= Fixed cost/ p/v ratio
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18. Cost Based Pricing
Cost-Plus Pricing (Mark up pricing)
Break even or target profit pricing
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19. Cost-Plus Pricing (Markup
Pricing)
It is the simplest method of pricing
It is adding a standard markup to the cost of the
product.
For example:
Variable cost Rs.10
Fixed costs Rs. 300,000
Expected unit sales 50,000
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