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Pricing Strategy

Pricing Strategy . What we learned from the chapter . Different strategies used in determining the price of an item and price adjustment base upon customer differences .  some real life examples are given in some sections. Market-skimming pricing. Set high initial price to skim market Ex:-

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Pricing Strategy

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  1. Pricing Strategy

  2. What we learned from the chapter • Different strategies used in determining the price of an item and price adjustment base upon customer differences . •  some real life examples are given in some sections

  3. Market-skimming pricing • Set high initial price to skim market • Ex:- • Sony introduced first hdtv in 1990 with 43,000 $ then it rapidly reduced to 6000 $ in 2001

  4. Market- penetration pricing • Small initial price but profitable market segment to attract large number of buyers and market share • Ex:- • dell used market penetrating strategy • also China

  5. Product Mix Pricing Strategies • Product line pricing • Optional- product pricing • Captive- product pricing • By-product pricing • Product bundle pricing

  6. Product line pricing • Setting price steps between product line items • Ex:- • Car models • Clothing store set three price levels based upon the quality (low ,average , high)

  7. Optional- product pricing • Selling accessories optional with the main product • Problem : to decide which the main product and the options • Ex:- • refrigerators come with ice makers • cars have many accessories

  8. Captive- product pricing • Product which must be used along with the main product • Product low price and the profit from captive product • Ex:- • printers are captured by the price of ink cartridges

  9. By-product pricing • refers to products with little or no value produced as a result of the main product. • Ex:- • petroleum's products and processed meats products they are derived of a main product.

  10. Product bundle pricing • Group some products and offering the bundle at a reduced price • EX:- • fast food restaurants bundle a burger ,fries and soft drink in a combo price • resorts sells special vacation package

  11. Price-Adjustment Strategies • Adjust the basic prices to account for various customer differences and changing situations.

  12. Price-Adjustment • Discounts : cash discounts functional discount seasonal discount • Allowances

  13. Price-Adjustment • Segmented pricing : when a company sells a product at two or more prices • Why we need it ?

  14. Psychological pricing • sale signs • prices ending in 9 • loss leader pricing • pricing matching guarantee • Reference prices : are prices that buyers carry in their minds

  15. Price-Adjustment Promotional pricing : is when prices are temporarily priced below list price or cost to increase demand • Special event pricing • Cash rebates • Low-interest financing • Longer warrantees • Free maintenance

  16. Price-Adjustment • Risks of promotional pricing • Any idea ? 1- easy to get into but hard to get out of it  2- customers may wait for promotions and avoid buying at regular price 3- Creates price wars

  17. Price-Adjustment Geographical pricing is used for customers in different parts of the country or the world • FOB-origin pricing • Uniformed-delivered pricing • Zone pricing • Basing-point pricing • Freight-absorption pricing

  18. Price-Adjustment International pricing is when prices are set in a specific country based on country-specific factors • Economic conditions • Competitive conditions • Laws and regulations • Infrastructure • Company marketing objective

  19. Are these strategies similar for all specialization ? • May differ in B2B marketing why? • Business buyers tend to buy for “rational” reasons while consumers tend to buy for “emotional” reasons.  Of course there are exceptions to this generalized rule.  • Business buyers are demanding hard facts to justify an expenditure, most notably a strong return on investment (ROI). • In a B2B sales process, we are often dealing with multiple influencers and decison makers, who each have their own set of buying criteria.

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