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Pricing Strategy: Seller and Buyer Perspectives, Role in Marketing Strategy, and Pricing Techniques

This article discusses various aspects of pricing strategy in marketing, including the seller and buyer perspectives, the role of pricing in marketing strategy, and different pricing techniques. Key issues such as costs, demand, customer value, and competitors' prices are explored, along with the relationship between price and revenue. The article also covers pricing objectives, supply and demand, competitive market structures, and the influence of other elements of the marketing mix on pricing strategy. Additionally, it delves into price elasticity of demand and its impact on pricing decisions, as well as different pricing strategies and situations that affect price sensitivity. Furthermore, it highlights yield management and alternative pricing strategies in consumer and business markets. The article concludes by addressing legal and ethical issues in pricing.

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Pricing Strategy: Seller and Buyer Perspectives, Role in Marketing Strategy, and Pricing Techniques

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  1. MARKETING STRATEGYO.C. FERRELL • MICHAEL D. HARTLINE 8 Pricing Strategy

  2. The Seller’s Perspective on Pricing Four key issues: (1) Costs (2) Demand (3) Customer value (4) Competitors’ prices The Buyer’s Perspective on Pricing Two key issues: (1) Perceived value (2) Price sensitivity The Role of Pricing inMarketing Strategy(1 of 2)

  3. A Shift in the Balance of Power Buyer’s market Large number of sellers in the market Many substitutes for the product Economy is weak Seller’s market Products are in short supply High demand Economy is strong The Relationship Between Price and Revenue Myth #1: When business is good, a price cut will increase market share. Myth #2: When business is bad, a price cut will stimulate sales. The Role of Pricing inMarketing Strategy(2 of 2)

  4. Pricing Objectives Supply and Demand The Firm’s Cost Structure Competition and Industry Structure Four basic competitive market structures: Pure Competition Monopolistic Competition Oligopoly Monopoly Stage of the Product Life Cycle Other Elements of the Marketing Mix Major Determinants ofPricing Strategy

  5. Formula for calculating price elasticity: Situations That Increase Price Sensitivity Availability of product substitutes Higher total expenditure Noticeable differences Easy price comparison Price Elasticity of Demand(1 of 2)

  6. Situations That Decrease Price Sensitivity Real or perceived necessities Lack of product substitutes Complementary products Product differentiation Perceived product benefits Situational influences Price Elasticity and Yield Management Allows simultaneous control of capacity and demand Control capacity by limiting available capacity at certain price points Control demand through price changes and overbooking capacity Price Elasticity of Demand(2 of 2)

  7. Yield Management fora Hypothetical Model Exhibit 8.4

  8. Base Pricing Strategies Price Skimming Penetration Pricing Prestige Pricing Value-Based Pricing (EDLP) Competitive Matching Non-Price Strategies Adjusting Prices in Consumer Markets Promotional Discounting Reference Pricing Odd-Even Pricing Price Bundling Pricing Strategies(1 of 2)

  9. Adjusting Prices in Business Markets Pricing techniques unique to business markets: Trade discounts Discounts and allowances Geographic pricing Transfer pricing Barter and countertrade Price discrimination Pricing Strategies(2 of 2)

  10. Three pricing levels in a negotiated price situation: (1) Opening position (2) Aspiration price (3) Limit Guidelines for making concessions: Avoid being the first side to make a concession Start with modest concessions and make them smaller as you proceed Avoid making concessions early in the negotiation Do not give up anything without something in return Fixed vs. Negotiated Pricing

  11. Major Online Auction Strategies Exhibit 8.5

  12. Price Discrimination Price Fixing Predatory Pricing Deceptive Pricing Legal and Ethical Issues in Pricing

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