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Pricing
Soma Giri
Disclaimer: - Some of the images and content have been taken from different online sources and this presentation is intended only for knowledge sharing but not for any profitable reasons
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What
This is the only element in the marketing mix that brings in the revenues. All the rest are costs
Price communicates the value positioning of the product.
Price = Cost + Profit
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Why
Higher price
Lower perceived
value
Company misses potential profits
A company must set its price in relation to the value delivered and perceived by the customer
Lower priceLower
perceived value
Company fails to harvest potential profits
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Why
Premium HighValue
SuperValue
OverCharging
MidValue
GoodValue
Rip-off FalseEconomy Economy
High Quality
Low Quality
High Price Low Price
Philip Kotler identified 9 price-quality strategies
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• Price Lining – offers merchandise in a given category at certain prices
– Shirts at $25, $35, $50
– Upper tier is better quality premium brand
– Middle tier is for average priced brands
– Lower tier for price-conscious customers.
What
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Optional Product– setting prices for accessories or options sold with the main product.
Captive Product – sets the price for one product low but compensates for that low price by pricing the supplies needed to operate that product high.
What
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Bundle Pricing – several complementary products sold at a single price.
– Travel services
– Computers and software
Geographical Pricing – refers to price adjustments required because of the location of the customer for delivery of products.
What
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Psychological Pricing –techniques that create an illusion
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Illusions
Illusions are very interesting
• Odd-Even Pricing– Odd numbers convey a bargain image -
- $.79, $9.99, $699
– Even numbers convey a quality image -- $10, $50, $100
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Prestige Pricing – sets a higher than average price to suggest status
Multiple-Unit Pricing – 3 for $.99
Suggests a bargain and helps increase sales volume.
Better than selling the same items at $.33 each.
What
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Everyday Low Prices (EDLP) – set on a consistent basis
What
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Promotional Pricing -- Used with sales promotion
• Loss Leader Pricing – offering very popular items for sale at below-cost prices
• Special-Event
– Back-to-school specials
– Dollar days
– Anniversary sales
• Rebates and Coupons
What