MARKETING MANAGEMENT 12th edition - PowerPoint PPT Presentation

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MARKETING MANAGEMENT 12th edition

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... Expected future price Usual discounted price Table 14.2 Consumer Perceptions vs. Reality for Cars Overvalued Brands Land Rover Kia Volkswagen Volvo Mercedes ... – PowerPoint PPT presentation

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Title: MARKETING MANAGEMENT 12th edition


1
MARKETING MANAGEMENT 12th edition
  • 14
  • Developing Pricing Strategies and Programs

Kotler Keller
2
Chapter Questions
  • How do consumers process and evaluate prices?
  • How should a company set prices initially for
    products or services?
  • How should a company adapt prices to meet varying
    circumstances and opportunities?
  • When should a company initiate a price change?
  • How should a company respond to a competitors
    price challenge?

3
Synonyms for Price
  • Rent
  • Tuition
  • Fee
  • Fare
  • Rate
  • Toll
  • Premium
  • Honorarium
  • Special assessment
  • Bribe
  • Dues
  • Salary
  • Commission
  • Wage
  • Tax

4
Common Pricing Mistakes
  • Determine costs and take traditional industry
    margins
  • Failure to revise price to capitalize on market
    changes
  • Setting price independently of the rest of the
    marketing mix
  • Failure to vary price by product item, market
    segment, distribution channels, and purchase
    occasion

5
Consumer Psychology and Pricing
  • Reference prices
  • Price-quality inferences
  • Price endings
  • Price cues

6
Table 14.1 Possible Consumer Reference Prices
  • Fair price
  • Typical price
  • Last price paid
  • Upper-bound price
  • Lower-bound price
  • Competitor prices
  • Expected future price
  • Usual discounted price

7
Table 14.2 Consumer Perceptions vs. Reality for
Cars
  • Overvalued Brands
  • Land Rover
  • Kia
  • Volkswagen
  • Volvo
  • Mercedes
  • Undervalued Brands
  • Mercury
  • Infiniti
  • Buick
  • Lincoln
  • Chrysler

8
Price Cues
  • Left to right pricing (299 versus 300)
  • Odd number discount perceptions
  • Even number value perceptions
  • Ending prices with 0 or 5
  • Sale written next to price

9
When to Use Price Cues
  • Customers purchase item infrequently
  • Customers are new
  • Product designs vary over time
  • Prices vary seasonally
  • Quality or sizes vary across stores

10
Steps in Setting Price
  • Select the price objective
  • Determine demand
  • Estimate costs
  • Analyze competitor price mix
  • Select pricing method
  • Select final price

11
Step 1 Selecting the Pricing Objective
  • Survival
  • Maximum current profit
  • Maximum market share
  • Maximum market skimming
  • Product-quality leadership

12
Step 2 Determining Demand
  • Price sensitivity
  • Estimating demand curves
  • Price elasticity of demand

13
Step 3 Estimating Costs
  • Types of Costs
  • Accumulated Production
  • Activity-Based Cost Accounting
  • Target Costing

14
Cost Terms and Production
  • Fixed costs
  • Variable costs
  • Total costs
  • Average cost
  • Cost at different levels of production

15
Step 5 Selecting a Pricing Method
  • Markup pricing
  • Target-return pricing
  • Perceived-value pricing
  • Value pricing
  • Going-rate pricing
  • Auction-type pricing

16
Auction-Type Pricing
  • English auctions
  • Dutch auctions
  • Sealed-bid auctions

17
Step 6 Selecting the Final Price
  • Impact of other marketing activities
  • Company pricing policies
  • Gain-and-risk sharing pricing
  • Impact of price on other parties

18
Price-Adaptation Strategies
  • Geographical pricing
  • Discounts/allowances
  • Promotional pricing
  • Differentiated pricing

19
Price-Adaptation Strategies
  • Countertrade
  • Barter
  • Compensation deal
  • Buyback arrangement
  • Offset
  • Discounts/ Allowances
  • Cash discount
  • Quantity discount
  • Functional discount
  • Seasonal discount
  • Allowance

20
Promotional Pricing Tactics
  • Loss-leader pricing
  • Special-event pricing
  • Cash rebates
  • Low-interest financing
  • Longer payment terms
  • Warranties and service contracts
  • Psychological discounting

21
Differentiated Pricing and Price Discrimination
  • Customer-segment pricing
  • Product-form pricing
  • Image pricing
  • Channel pricing
  • Location pricing
  • Time pricing
  • Yield pricing

22
Increasing Prices
  • Delayed quotation pricing
  • Escalator clauses
  • Unbundling
  • Reduction of discounts

23
Brand Leader Responses to Competitive Price Cuts
  • Maintain price
  • Maintain price and add value
  • Reduce price
  • Increase price and improve quality
  • Launch a low-price fighter line
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