product / price / promotion / place marketing
TRANSCRIPT
Product / Price / Promotion / Place
Marketing...
Pricing Strategies
Low High
Low
High
EconomyPricing
Market Penetration
Market Skimming
PremiumPricing
Price
Quality
Pricing Strategies: Market Skimming
Applies to new, distinctive products, early in the Product Life Cycle
– Common when there is little competition– Set the price high and reach BEP quickly– Sometimes used to limit demand if you cannot produce
enough to meet heavy demand– Initial high price attracts wealthy trendsetters– Most new consumer electronic products practice this pricing
technique
The iPod was priced $259 in 2004.
The PS3 was priced $599 in 2007.
Pricing Strategies: Market Skimming
Pricing Strategies: Captive Product Pricing
Products that require a “refill” component can command a captive price. Examples are cartridges for razors, water filters and printers…
Pricing Strategies: Common Pricing Mistakes…
Pricing Strategies: Economy Pricing
Pricing Strategies: Premium Pricing
Pricing Adjustment Strategies
• Discount / allowance • Segmented• Psychological• Promotional• Competitive
• Types of discounts– Cash discount– Quantity discount– Seasonal discount
• Allowances– Trade-in allowances– Promotional allowances
StrategiesStrategies
Pricing Adjustment Strategies: Discount / allowance
Quantity discount
Cash discount
Seasonal Discounts
Trade-in allowances
Pricing Adjustment Strategies: Discount / allowance
• Discount / allowance • Segmented• Psychological• Promotional• Competitive
• Types of segmented pricing strategies:– Product-line pricing– Location pricing– Time pricing
• Also called revenue or yield management
• Certain conditions must exist for segmented pricing to be effective
StrategiesStrategies
Pricing Adjustment Strategies
Pricing a Product-Line
Pricing Adjustment Strategies: Segmented
Pricing Adjustment Strategies: Segmented
Segmented Pricing Strategies: Time Pricing
Pricing Adjustment Strategies: Segmented
• Discount / allowance • Segmented• Psychological• Promotional• Competitive
• The price is used to say something about the product.– Price-quality relationship– Reference prices– Differences as small as five cents
can be important– Numeric digits may have
symbolic and visual qualities that psychologically influence the buyer
StrategiesStrategies
Pricing Adjustment Strategies
Psychological Pricing
Psychological pricing occurs when sellers consider the psychological factors of price. The price tag on a pair of moccasin UGG slippers is $100. The price on a pair that looks almost identical, sold at L.L. Bean is half that at $49.95. The difference in price is not due to a drastic difference in quality, both are made from sheepskin and both have indoor/outdoor soles, the difference in price is an example of psychological pricing.
The UGG Slipper: $100
The L.L. Bean Slipper: $49.95
Pricing Adjustment Strategies: Psychological
Pricing Adjustment Strategies: Psychological
• Temporarily pricing products below the list price or even below cost– Contracts, Special-event
pricing– Cash rebates– Low-interest financing,
warranties– Loss leaders
StrategiesStrategies
• Discount / allowance • Segmented• Psychological• Promotional• Competitive
Pricing Adjustment Strategies
Pricing Adjustment Strategies: Promotional
Pricing Adjustment Strategies: Promotional
Pricing Adjustment Strategies: Promotional
Loss LeaderGood or service advertised and sold at below cost price. Its purpose is to bring customers in the store (usually a supermarket) on the assumption that, once inside the store, customers will be stimulated to buy full priced items as well.
Challenges:
–Easily copied by competitors–Creates deal-prone consumers–Erode brand value–Industry Price Wars
Pricing Adjustment Strategies: Promotional
• most popular strategy• products in a specific category
match/follow competitors closely• companies compete using something
other than price: ads, promos, distribution, product features
• manufacturer with largest market share, first product, or longest on market sets benchmark price
• others compare their product, set their price in relation (remember costs vs benefits = value)
StrategiesStrategies
• Discount / allowance • Segmented• Psychological• Promotional• Competitive
Pricing Adjustment Strategies
Competitive Pricing- some retailers have a strict competitive price policy and will meet or beat others’ prices- some stores hire competitive shoppers who research the competition to ensure best price
Pricing Adjustment Strategies
Pricing Adjustment Strategies: Competitive
No Loss Leader => Every Day Low (or Competitive) Pricing
Pie Chart humour…1st Qtr2nd Qtr3rd Qtr4th Qtr
