Transcript Pricing PPT
Pricing Strategy Understanding Consumer Value • Max price for yearbook? • We each place different value (and willing to pay different price) for the same product • Key to pricing is “understanding the value that buyers place on a product or service” • How is that done? Shirt Example • • • • Lax T-shirts: cost $4/shirt Sell $10/shirt Margin/profit: $6/shirt Price markup is 150% (104)/4=150% • Would lowering the selling price to $7 – Sell more shirts? – Increase total profits? Pricing Factors • Supply and Demand – When was the last time you clearly overpaid for a product? Why? – Peak and off-peak rates • Costs – To ensure a profit • Competition – Evaluate Verizon vs. Comcast • Combination of the three above Market Share • Market Share is the percentage of the total sales volume generated by all competitors in a given market. • Iphones? Tickets • Some minor league baseball games are $6. Many don’t offer discount tickets. Why? Substitutes – Brand Loyalty • There are lots of products with available substitutes (cereals, detergents, etc.) • Name a product where you would NOT accept a substitute? Psychological Pricing • Odd/even pricing: suggests bargains • Prestige pricing: suggests exclusiveness • Multi-unit pricing: suggests a bargain by pricing items in multiples (1 for $.33 or 3 for $.99) • Bundle pricing: All inclusive trip, Verizon • Promotional pricing: holidays, rebates • Discount pricing: based on quantity, seasonal items, terms (cash or paying by certain date) Luxury vs. Necessity • Gym membership • Cell phone • Cold medicine when you’re sick Urgency of Purchase • When was the last time you bought something because of a time restriction? • HHS tickets going on sale – more at door? • Gas when your car was on empty • Infomercial with time winding down Price wars • Airline tickets, gasoline, computers • How much does price factoring in the three products named above? • Is anyone loyal to an airline based on frequent flyer miles (price & promotional tie in)? Conclusion • Create awareness to sell right product, at the right place, at the right price to the right people.