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Maximizing Brand Equity Through Strategic Pricing Tactics

Learn how to leverage pricing strategies to enhance brand equity, measuring the impact of price, promotions, and advertising. Explore the role of pricing in brand management and creating value for consumers.

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Maximizing Brand Equity Through Strategic Pricing Tactics

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  1. Professor Carl Mela BA 460 Product Management Fuqua School of Business Brand Management System On Building A Brand Managing Across Brands Pricing

  2. Agenda • Pricing to Build Equity • Measuring the Effect of Price, Promotion, and Advertising on Brand Equity

  3. Pricing to Build Equity • When attributes are based on experience (new camera) or belief (detergent), consumers often infer quality from price. • This leads to the notion of price tiers. • Quality and price determine value. Consumers will buy if value>cost. • Increase quality • Reduce price

  4. Pricing to Build Brand Equity • Value pricing: Balance features and prices to satisfy objectives of firm and consumers • Design and delivery • “Build a Better Mousetrap” article • Product costs • Do customers really want to pay for a feature? • Product prices • Willingness to pay measures (often an indicator of equity) - match prices to willingness to pay

  5. Pricing to Build Brand Equity • EDLP (Every Day Low Price) • Is it better to cut price and reduce deals • Train consumers to be price sensitive • Inventory costs go up • Production costs increase • Or increase deals and price? • Increase excitement for brand • Price discriminate - “Cheaper than You” paper • Jedidi, Mela and Gupta paper.

  6. Measuring the Effect of Price, Promotion, and Advertising on Brand Equity • Jedidi, Mela & Gupta • Brand Sales = b0 + b1*price + b2*deal • b0 is brand equity • b0=f (ads and discounting) • b1=f (ads and discounting) • b2=f (ads and discounting)

  7. Summary • Price affects equity • Inferences of quality • Low price focuses attention away from brand • Solutions to price competition • Fighter brand • Differentiate brand • Lower costs and price • EDLP • Charge different prices

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