The document outlines key considerations for developing pricing strategies, focusing on price elasticity, demographic and psychological factors that influence consumer behavior. It discusses various pricing methods, including cost-based, demand-based, and competition-based strategies, alongside different pricing tactics like penetration and premium pricing. Additionally, it addresses the importance of understanding market dynamics and competitor behavior in setting effective pricing.

1. Pricing Strategy

2. You can download this presentation at: http:// freepresentation.org Please visit F reePresentation. org for more presentations on marketing, strategy and case solution

3. Three Primary Consideration Price Elasticity Demographic Factors Psychological Factors

4. Number of potential buyers, and their age, education, and gender. Location of potential buyers Position of potential buyers Expected consumption rates of potential buyers Economic strength of potential buyers Demographic Factors

5. Related to pricing concern primarily how consumers will perceive various prices or price changes. Will potential buyers use price as an indicator of product quality? Will potential buyers be favorably attracted by odd pricing? Will potential buyers perceive the price as too high relative to the service the product gives them? Are potential buyers prestige oriented and therefore willing to pay higher prices to fulfill this needs? How much will potential buyers be willing o pay for the product? Psychological Factors

6. Both demographic and psychological factors affect price elasticity. Price elasticity is a measure of consumers’ price elasticity: e= % in demand / % in price Although difficult to measure, there are two basic methods commonly used to estimate price elasticity. Estimated from historical data or from price/quantity data across different sales district. Estimated by sampling a group of consumers from the target market and polling them concerning various price/quantity relationship. Price Elasticity

7. Pricing Objectives Pricing to achieve a target return on investment Stabilization of price and margin Pricing to achieve a target market share Pricing to meet or prevent competition

8. Number of competitors Size of competitors Location of competitors Condition of entry into the industry Degree of vertical integration of competitors Number of products sold by competitors Cost structure of competitors Historical reaction of competitors to prices changes Pricing Set Up Consideration

9. Pricing Strategies Premium Pricing Economic Penetration Pricing Skimming Pricing Low High Low High Quality Price

10. Economic Low price  low quality Penetration Pricing Offer low price to gain market share, usually in fast moving consumers good Skimming Pricing During introduction of products or because the limit of distributions channel Premium Pricing Branded product, prestige product  high quality and high price Pricing Strategies

11. A Cost-Based Price Strategy Price set up by calculate production cost, promotion cost, and overhead cost, then adding the desired profit to those calculation. A Demand-Based Price Strategy Price set up after analyzing consumer desires and determines the range of prices acceptable to the target market. A Competition-Based Price Strategy The marketer sets prices in accordance with competitors. Pricing Strategies

12. A General Pricing Model Set price objectives Evaluate product- price relationship Set initial price structure Analyze profit potential Estimate costs and other price limitation Change price as needed

13. Thank You