New-Product Pricing Strategies
Product Mix Pricing Strategies
Price Adjustment Strategies
Price Changes
Market-skimming pricing is a strategy with high initial prices to âskimâ revenue layers from the market
Product quality and image must support the price
Buyers must want the product at the price
Costs of producing the product in small volume should not cancel the advantage of higher prices
Competitors should not be able to enter the market easily
Market-penetration pricing sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share
Price-sensitive market
Inverse relationship of production and distribution cost to sales growth
Low prices must keep competition out of the market
New-Product Pricing Strategies
Product Mix Pricing Strategies
Price Adjustment Strategies
Price Changes
Market-skimming pricing is a strategy with high initial prices to âskimâ revenue layers from the market
Product quality and image must support the price
Buyers must want the product at the price
Costs of producing the product in small volume should not cancel the advantage of higher prices
Competitors should not be able to enter the market easily
Market-penetration pricing sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share
Price-sensitive market
Inverse relationship of production and distribution cost to sales growth
Low prices must keep competition out of the market
Surveys a number of essential issues related to pricing and public policy in market economies. Begins with a brief review of the price-determination process in competitive markets, then examines a range of topics involving pricing and public policy in monopoly and oligopoly markets. Includes a number of graphs that illustrate the relationship between costs, demand, price, efficiency, and profitability under various market conditions.
In this presentation, we will discuss about various aspects of marketing channels, needs and importance, how physical distribution and channel decision are critical for marketing channels, how does marketing channel functions. We will also talk about the various distributions channel structures.
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What is Pricing Strategy and what are the objectives and factors affecting the Pricing Strategy.
There are Certain types of Pricing Strategies as well. Each and every strategy has its own affect on the product and services offered by an organization.
memilih tujuan penetapan harga
Kelangsungan hidup/ Survival
Memaksimalkan keuntungan sekarang/ Maximize current profits
Memaksimalkan pangsa pasar mereka/ Maximize their market share/
Penetapan harga penetrasi pasar/ Market-penetration pricing
Terbaik apabila:
Pasar sangat peka terhadap harga, dan harga rendah merangsang pertumbuhan pasar,
Biaya produksi dan distribusi menurun dengan semakin banyaknya pengalaman produksi, dan
Harga yang rendah menghilangkan semangat pesaing lama dan potensial.
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E-commerce in 2024 is characterized by a dynamic blend of opportunities and significant challenges. Supply chain disruptions and inventory shortages are critical issues, leading to increased shipping delays and rising costs, which impact timely delivery and squeeze profit margins. Efficient logistics management is essential, yet it is often hampered by these external factors. Payment processing, while needing to ensure security and user convenience, grapples with preventing fraud and integrating diverse payment methods, adding another layer of complexity. Furthermore, fulfillment operations require a streamlined approach to handle volume spikes and maintain accuracy in order picking, packing, and shipping, all while meeting customers' heightened expectations for faster delivery times.
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The e-commerce sector is evolving rapidly, and businesses that effectively manage operational challenges and implement innovative strategies are best positioned for long-term success.
Digital marketing is the art and science of promoting products or services using digital channels to reach and engage with potential customers. It encompasses a wide range of online tactics and strategies aimed at increasing brand visibility, driving website traffic, generating leads, and ultimately, converting those leads into customers.
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Vladimir Mulhem has over 20 years of experience in commercialising cutting edge creative technology across construction, marketing and retail.
Previously the founder and Tech and Innovation Director of Creative Content Works working with the likes of Next, John Lewis and JD Sport, he now helps retailers, brands and agencies solve challenges of applying the emerging technologies 3D, AR, VR and Gen AI to real-world problems.
In this webinar, Vladimir will be covering the following topics:
Applications of 3D and AR in Digital Commerce,
Benefits of 3D and AR,
Tools to create, manage and publish 3D and AR in Digital Commerce.
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3. ââ¸Price is the sum of all the values that customers give up to
gain the benefits of having or using a product or a service
â¸Price is the only element in the marketing mix that produces
revenue; all other elements represent cost
Price
4. Chapter Outline
1.New-Product Pricing Strategies
2.Product Mix Pricing Strategies
3.Price Adjustment Strategies
4.Price Changes
6.Public Policy and Pricing
Based on â âPrinciple of Marketing | A Global Perspectiveâ by, Philip Kotlar, Gary Armstrong, and others.
4
5. âTwo Broad Strategies
â¸Market skimming pricing â set a high initial price
â¸Market penetration pricing â set a low initial price
New-Product Pricing Strategies
6. New-Product Pricing Strategies
Market skimming pricing
It is a strategy with high initial prices to âskimâ
revenues layer-by-layer from the market.
âšProduct quality and image must support the
price.
âšBuyers must want the product at the price.
âšThe costs of producing a smaller volume cannot
be so high that they cancel the advantage of higher
prices.
âšCompetitors should not be able to enter the
market easily and undercut the high price.
6
Market penetration pricing
It sets a low initial price in order to penetrate the
market quickly and deeply to attract a large
number of buyers quickly to gain market share.
âšPrice sensitive market
âšProduction and distribution costs must fall as
sales volume increases
âšLow prices must keep competition out of the
market.
7. Product-Mix Pricing Strategies
The firm looks for a set of prices that maximizes the profits
on the total product mix.
Five product mix pricing situations
â¸Product line pricing â the products in the product line
â¸Optional product pricing â optional or accessory products
â¸Captive product pricing - complementary products
â¸By-product pricing â by-products
â¸Product bundle pricing â several products
7
8. Product-Mix Pricing Strategies
8
Product line pricing takes into
account the cost difference
between products in the line,
customer evaluation of their
features, and competitorsâ prices.
â the price differences represent
the perceived quality differences
Normal Hair
$3.90
Anti-dandruff
$4.90
Hair Fall Defense
$4.90
Oily Hair
$3.90
Optional product pricing takes
into account optional or
accessory products along with
the main product. â Decide which
items to include in the base price
and which to offer as options
New car with sports rims
$60,000New car with ordinary rims
$59,000
9. Product-Mix Pricing Strategies
Captive product pricing involves products that must be used
along with the main product.
â Price the main, or driver product low and seek high
margins on the supplies
⸠For services: two-part pricing is where the price is
broken into fixed fee and variable usage fee.
â Decide how much to charge for the basic service and
how much for the variable usage
â The fixed amount should be low enough to induce
usage of the service; profit can be made on the variable
fees
9
10. Product-Mix Pricing Strategies
By-product pricing refers to
products with little or no value
produced as a result of the
main product.
â¸Producers will seek little or
no profit
â¸Producers should accept
any price that covers more
than the cost to cover storage
and delivery.
10
Product bundle pricing combines several
products and offer the bundle at a reduced
price.
â¸Price bundling can promote the sales of
products
1 bottle: $2.70
Bundled 2 bottles: $4.90
11. â¸Discount and allowance pricing
â¸Segmented pricing
â¸Psychological pricing
â¸Promotional pricing
â¸Geographical pricing
â¸Dynamic pricing
â¸International pricing
Price Adjustment Strategies
11
Companies adjust basic prices to account for various
customer differences and changing situations.
12. Price Adjustment Strategies
â¸Discount and allowance pricing reduces
prices to reward customer for certain
responses such as paying early, volume
purchases, and off-season buying.
âšDiscounts
âšCash discount for paying promptly
âšQuantity discount for buying in large volume
âšFunctional (trade) discount for selling,
storing, distribution, and record keeping
âšAllowances
âšTrade-in allowance for turning in an old item
when buying a new one
âšPromotional allowance to reward dealers for
participating in advertising or sales support
programs
â¸Segmented pricing is used when a
company sells a product at two or
more prices even though the difference
is not based on cost.
â¸Adjust basic prices to allow for
differences in customers, products, and
locations
â¸Airlines, hotels and restaurants â
revenue management or yield
management
â¸To be effective:
âMarket must be segment able
âSegments must show different degrees
of demand
âWatching the market cannot exceed the
extra revenue obtained from the price
difference
âMust be legal
12
13. Price Adjustment Strategies
13
â¸Customer segment pricing is when different customer pay
for different prices for the same product or service.
â¸Product form segment pricing is when different versions of
the product are priced differently but not according to
differences in cost.
â¸Location pricing is when the product is sold in different
geographic areas and priced differently in those areas even
though the cost is the same.
â¸Time pricing is when a firm varies its prices by the season,
the month, the day, and even the hour.
14. Price Adjustment Strategies
14
Psychological pricing occurs when sellers consider the
psychology of prices and not simply the economics.
âReference prices are prices that buyers carry in their minds
and refer to when looking at a given product.
âšNoting current prices
âšRemembering past prices
âšAssessing the buying situations
15. Price Adjustment Strategies
15
Promotional pricing is when prices are
temporarily priced below list price or
cost to increase demand.
âšLoss leaders
âšSpecial event pricing
âšCash rebates
âšLow interest financing
âšLonger warrantees
âšFree maintenance
â¸Risks of promotional pricing
âšUsed too frequently
âšCopies by competitors can create
âdeal-proneâ customers who will wait for
promotions and avoid buying at regular
price.
âšCreates price wars.
â¸Loss leaders are products sold below
cost to attract customers in the hope
they will buy other items at normal
markups.
â¸Special event pricing is used to attract
customers during certain seasons or
periods.
â¸Cash rebates are given to consumers
who buy products within a specified
time.
â¸Low interest financing, longer
warrantees, and free maintenance lower
the consumerâs âtotal price.â
16. Price Adjustment Strategies
16
Geographical pricing is used
for customers in different
parts of the country or the
world.
âšFOB pricing
âšUniformed delivery pricing
âšZone pricing
âšBasing point pricing
âšFreight absorption pricing
â¸FOB (free on board) pricing means that the
goods are placed free on board a carrier. At that
point the title and responsibility passes to the
customer, who pays the freight from the factory
to the destination.
â¸Uniformed delivery pricing means the
company charges the same price plus freight to
all customers, regardless of location.
â¸Zone pricing means that the company sets up
two or more zones where customers within a
given zone pay a single total price.
â¸Basing point pricing means that a seller
selects a given city as âbasing pointâ and
charges all customers the freight cost
associated from that city to the customer
location regardless of the city from which the
goods are actually shipped.
â¸Freight absorption pricing means that the
seller absorbs all or part of the actual freight
charge as an incentive to attract business in
competitive markets.
17. Price Adjustment Strategies
17
â¸Dynamic pricing is when prices are adjusted
continually to meet the characteristics and needs of
the individual customer and situations.
â¸International pricing is when prices are set in a
specific country based on country-specific factors.
âEconomic conditions
âCompetitive conditions
âLaws and regulations
âInfrastructure
âCompany marketing objectives
18. Price Changes
18
Initiating Pricing Changes
â¸Price cuts is a reduction in selling price.
âšExcess capacity
âšIncrease market share
â¸Price increases is an increase in selling price
âšCost inflation
âšIncreased demand and lack of supply
Buyersâ Interpretation to Price Changes
â¸Price cuts
âšNew models will be available
âšModels are not selling well
âšQuality issues
â¸Price increases
âšProduct is âhotâ
âšCompany greed
19. Price Changes
19
Responding to Price Changes
â¸Questions
âšWhy did the competitor change the price?
âšIs the price cut permanent or temporary?
âšWhat is the effect on market share and profits?
âšWill competitors respond?
â¸Solutions
âšReduce price to match competition
âšMaintain price but raise the perceived value through
communications
âšImprove quality and increase price
âšLaunch a lower-price âfighting brandâ
20. Public Policy and Pricing
20
Pricing Within Channel Levels
â¸Price fixing: Sellers must set prices without talking to
competitors.
â¸Predatory pricing: Selling below cost with the intention of
punishing a competitor or gaining higher long-term profits by
putting competitors out of business.
21. Public Policy and Pricing
21
Pricing Across Channel Levels
â¸Retail (resale) price maintenance is when a manufacturer
requires a dealer to charge a specific retail price for its
products.
â¸Deceptive pricing occurs when a seller states prices or price
savings that mislead consumers or are not actually available to
consumers.
âScanner fraud: Failure of the seller to enter current or sale
prices into the computer system.
âPrice confusion results when firms employ pricing methods
that make it difficult for consumers to understand what price
they are really paying.