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MKT 5207 Service Marketing

MKT 5207 Service Marketing. Afjal Hossain Assistant Professor Department of Marketing. Chapter 17 Pricing of Services. Pricing Quiz. Which dentist would you choose for a filling in your tooth?. Customer Often Lack of Knowledge of Service Prices.

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MKT 5207 Service Marketing

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  1. MKT 5207Service Marketing Afjal Hossain Assistant Professor Department of Marketing

  2. Chapter 17Pricing of Services

  3. Pricing Quiz • Which dentist would you choose for a filling in your tooth?

  4. Customer Often Lack of Knowledge of Service Prices • Customers often lack reference prices for service • Service variability limits knowledge • Providers are unwilling to estimate prices • Individual customer needs vary • Collection of price information by customers is difficult • Prices are not visible

  5. The Role of Non-monetary Price • Time costs • Search costs • Convenience costs • Psychological costs Do you trade time for money?

  6. Price as an Indicator of Service Quality Can price attract somecustomers?

  7. Price as an Indicator of Service Quality InfersHigh Quality Service Infers Low Quality Service

  8. Three Basic Marketing Price Structures and Challenges for Services Challenges: 1. Costs difficult to trace. 2. Labor is more difficult to price than materials. 3. Costs may not equal the value that customers perceive the services are worth. Challenges: 1. Small firms may charge too little to be viable. 2. Heterogeneity of services limits comparability. 3. Prices may not reflect customer value. Cost-based Competition- based Demand-based Challenges: 1. Monetary price must be adjusted to reflect the value of non-monetary costs. 2. Information on service costs is less available to customers; hence, price may not be a central factor. Figure 17.1

  9. A Customer-Focused Approach to The Pricing Process

  10. Four Customer Definitions of Value Value is low price. Value is everything I want in a service. Value is all that I get for all that I give. Value is the quality I get for the price I pay. Figure 17.2

  11. Pricing Strategies When the Customer Defines Value as Low Price • Value is low price • Discounting • Odd pricing • Synchro-pricing • Penetration pricing Figure 17.3

  12. Pricing Strategies When the Customer Defines Value as Everything Wanted in a Service • Value is everything • I want in a service • Prestige pricing • Skimming pricing Figure 17.4

  13. Pricing Strategies When the Customer Defines Value as Quality for the Price Paid • Value is the quality • I get for the price I pay • Value pricing • Market segmentation pricing Figure 17.5

  14. Pricing Strategies When the Customer Defines Value as All that Is Received for All that Is Given • Value is all that • I get for all that I give • Price framing • Price bundling • Complementary pricing • Results-based pricing Figure 17.6

  15. Summary of Service Pricing Strategies forFour Customer Definitions of Value • Value is everything • I want in a service • Prestige pricing • Skimming pricing • Value is low price • Discounting • Odd pricing • Synchro-pricing • Penetration pricing • Value is the quality • I get for the price I pay • Value pricing • Market segmentation pricing • Value is all that I get • for all that I give • Price framing • Price bundling • Complementary pricing • Results-based pricing Figure 17.7

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