Transcript Chapter

Phillip
Kevin Lane
Kotler • Keller
Marketing Management • 14e
Developing
Pricing Strategies
and Programs
Discussion Questions
1. How do consumers process and evaluate prices?
2. How should a company set prices initially for
products or services?
3. How should a company adapt prices to meet
varying circumstances and opportunities?
4. When should a company initiate a price change?
5. How should a company respond to a
competitor’s price change?
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Marketing Mix
Cost
Product
Price
Cost
Place
Promotion
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Revenue
Producer
Cost
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Pricing
Forms
Price
Components
Functions
$31.50
$33.50
Bargaining
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Changing Price Environment
Buyers
I’ll pay $235.00
Instant Price Comparisons
Get Products Free
Name Your Own Price
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Changing Price Environment
Sellers
$29.99
$19.99
$24.99
Selective Pricing
Negotiate Prices
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Monitor Customers
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How Companies Price
Product-line Managers
(w/guidance)
Small Business Owner
Pricing Department
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Consumer Psychology and Pricing
Price-Quality Inferences
Reference Prices
99
$1.
Price Endings
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A Black T-Shirt
Armani - $275
Gap - $14.90
H&M - $7.90
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Setting the Price
6
5
Select Final Price
Price Method
4 Competitor Analysis
3
Estimate Costs
2 Determine Demand
1
Pricing Objective
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Selecting the Pricing Objective
Survival
Maximum Current Profit
Maximum Market Share
Maximum Market Skimming
Product-Quality Leadership
Other Objectives
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Determining Demand
Price sensitivity
Estimating demand curves
Price Elasticity of Demand
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Inelastic and Elastic Demand
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Estimating Costs
Demand
Price Ceiling
Price
Profit
Price Floor
Costs
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Estimating Costs
Types of costs
Fixed Costs
(overhead)
Variable Costs
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Total Costs
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Costs at Varying Levels of Production
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Estimating Costs
Accumulated Production
Experience Curve
(Learning Curve)
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Estimating Costs
Target Costing
Market research
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Design engineers
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The Experience Curve
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Analyzing Competitors’ Offers
Price
Costs
Reaction
Worth to Customer
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Selecting a Pricing Method
Pricing Methods
• Markup
• Target-return
• Perceived-Value
• Value
• Going-rate
• Auction-type
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High Price
(No possible
demand at this price)
Ceiling price
Three Cs
Model for
Price Setting
Customers’ assessment
of unique product
features
Orienting point
Competitors’ prices
and prices of
substitutes
Costs
Floor Price
Low Price
(No possible
profit at this price)
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Markup Pricing
Variable cost per toaster
$10
Fixed costs
$300,000
Expected unit sales
50,000
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Target-Return Pricing
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Target-Return Pricing
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Perceived-Value Pricing
Customer’s perceived-value
•
•
•
•
Performance $$$
Warranty $
Customer support $
Reputation $$
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Value Pricing
EDLP
THOUSANDS OF
LOW PRICES
EVERY DAY
Level of
Quality
throughout the store
P1
C1
P2 C2
High
Pricing
Low
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Going-Rate Pricing
Commodities
Follow the Leader
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Auction Pricing
English auction
(ascending bids)
Dutch auction
(descending bids)
Sealed-bid auction
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Selecting the Final Price
Impact on others
Brand
Quality
Pricing Policies
Gain-and-risk-sharing
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Adapting the Price
Geographic Pricing
Price Discounts
and Allowances
Differentiated Pricing
Promotional Pricing
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Dealing with Price Changes
Raising Prices
Cutting Prices
Competitor Moves
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