Markma

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Chapter 14: Developing Price Strategies and Programs

Francis L. EstolanoMay 10, 2013

How Much Are You?

Outline:


•6 Steps in Setting Price•Price Adaptation Strategies

6 Steps in Setting Price

Select the Price Objective

Determine Demand

Estimate Costs

Analyze competitor prize

Select Pricing method

Select final price



1st Step: Selecting the Price Objective

•Survival•Maximum current profit•Maximum market share•Maximum market skimming•Product-quality leadership


2nd Step: Determining Demand

•Price Sensitivity•Estimating Demand Curves•Price Elasticity of Demand


3rd Step: Estimating Costs

•Types of Costs•Accumulated Production•Activity-based Cost Accounting•Target Costing


4rd Step: Analyze Competitor Price Mix

•Identify industry price•Compare with costs of product•Change pricing strategy•Stay ahead with trends in pricing strategy through competitor


5th Step: Selecting Pricing Method

•Mark up Pricing•Target-Return Pricing•Perceived-Value Pricing•Value Pricing•Going-rate Pricing•Auction Type Pricing


6th Step: Selecting the Final Price

•Impact of other marketing activities•Company pricing policies•Gain and risk sharing pricing•Impact of price on other parties

4 Price-Adaptation Strategies


1.Geographical Pricing2.Price Discounts and Allowances3.Promotional Pricing4.Differentiated Pricing

Geographical Pricing


The practice of modifying a basic list of price based on geographical location

Price Discounts and Allowances


Prices of goods or services are being reduced.

Promotional Pricing


• Loss-leader Pricing• Special Event Pricing• Cash Rebates• Low-Interest Financing• Longer Payment Terms• Warranties and Service Contracts• Psychological Discounting

Differentiated Pricing


• Customer Segment Pricing• Product form Pricing• Image Pricing• Channel Pricing• Location Pricing• Time Pricing• Yield Pricing

REMEMBER THIS….


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Chapter 14: Developing Price Strategies and Programs

Francis L. EstolanoMay 10, 2013

How Much Are You?

Markma

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