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Principles of Marketing

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Principles of Marketing Lecture-27 Summary of Lecture-26 Price - Quality Strategies Price-Adjustment Strategies Discount and Allowance Pricing Segmented Pricing ... – PowerPoint PPT presentation

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Title: Principles of Marketing


1
Principles of Marketing
Lecture-27
2
Summaryof Lecture-26
3
Price - Quality Strategies
4
Price Higher Lower
Premium Strategy
Good-Value Strategy
Higher
Overcharging Strategy
Economy Strategy
Quality
Lower
5
Price-Adjustment Strategies
6
  • Discount and Allowance Pricing
  • Segmented Pricing
  • Psychological Pricing
  • Promotional Pricing
  • Geographical Pricing
  • International Pricing

7
Todays Topics
8
Initiating and Responding to Price Changes
9
Initiating Price Cuts
Competitor Reactions To Price Changes
Price Changes
Buyer Reactions to Price Changes
Initiating Price Increases
10
Price Changes
11
  • Initiating Price Cuts is Desirable When a Firm
  • Has excess capacity
  • Faces falling market share due to price
    competition
  • Desires to be a market share leader

12
  • Price Increases are Desirable
  • If a firm can increase profit, faces cost
    inflation, or faces greater demand than can be
    supplied.
  • Alternatives to Increasing Price
  • Reducing product size, using less expensive
    materials, unbundling the product.

13
  • Buyer reactions to price changes must be
    considered.
  • Competitors are more likely to react to price
    changes under certain conditions.
  • Product is uniform
  • Buyers are well informed

14
Responding to price changes
15
Has Competitor Cut Price?
Hold Current Price Continue to
Monitor Competitors Price.
No
Will Lower Price Negatively Affect Our Market
Share Profits?
Reduce Price
No
Raise Perceived Quality
Can/ Should Effective Action be Taken?
Improve Quality Increase Price
No
Launch Low-Price Fighting Brand
Yes
16
  • Respond To Price Changes Only If
  • Market share / profits will be negatively
    affected if nothing is changed.

17
  • Four strategies
  • Reduce price
  • Raise perceived quality
  • Improve quality and increase price
  • Launch a low price fighting brand

18
  • End of Price part..

19
  • Review 2nd P (Price)

20
(No Transcript)
21
What is Price?
22
Price Has Many Names
  • Bribe
  • Salary
  • Wage
  • Interest
  • Tax
  • Rent
  • Fee
  • Rate
  • Commission
  • Tuition
  • Fare
  • Toll
  • Premium

23
Definition
24
  • Price
  • The amount of money charged for a product or
    service, or the sum of the values that consumers
    exchange for the benefits of having or using the
    product or service.

25
Factors Affecting Price Decisions
26
Internal Factors
Pricing Decisions
Positioning Objectives
Target Market
External Factors
27
Internal Factors Affecting Pricing Decisions
28
Marketing Objectives
Marketing-Mix Strategy
Costs
Organizational Considerations
29
External factors affecting Pricing decisions
30
Market and Demand
Competitors Costs, Prices, and Offers
Other External Factors Economic
Conditions Reseller Needs Government
Actions Social Concerns
31
Price Elasticity of Demand
  • How quantity demanded responds to price changes

32
(No Transcript)
33
General Pricing Approaches
34
  • Cost-based Pricing
  • Value-based Pricing
  • Competition-based Pricing

35
Break-evenforDetermining Target Return Price
and Break-even Volume
36
Total revenue
1200
Target profit
Total cost
1000
Break-even point
800
600
Rupees (in thousands)
400
Fixed cost
200
0
10
20
30
40
50
Sales volume in units (thousands)
37
New Product Pricing Strategies
38
  • Market Skimming
  • Market Penetration

39
Product Mix Pricing Strategies
40
Product Line Pricing
Optional-Product Pricing
Captive-Product Pricing
By-Product Pricing
Product Mix Pricing Strategies
Product-Bundle Pricing
41
Price - Quality Strategies
42
Price Higher Lower
Premium Strategy
Good-Value Strategy
Higher
Overcharging Strategy
Economy Strategy
Quality
Lower
43
Price-Adjustment Strategies
44
  • Discount and Allowance Pricing
  • Segmented Pricing
  • Psychological Pricing
  • Promotional Pricing
  • Geographical Pricing
  • International Pricing

45
Initiating Price Cuts
Competitor Reactions To Price Changes
Price Changes
Buyer Reactions to Price Changes
Initiating Price Increases
46
Responding to price changes
47
Has Competitor Cut Price?
Hold Current Price Continue to
Monitor Competitors Price.
No
Will Lower Price Negatively Affect Our Market
Share Profits?
Reduce Price
No
Raise Perceived Quality
Can/ Should Effective Action be Taken?
Improve Quality Increase Price
No
Launch Low-Price Fighting Brand
Yes
48
Enough for Pricing. . .
49
Summary
50
(No Transcript)
51
Next.
52
(No Transcript)
53
Principles of Marketing
Lecture-27
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