pricing strategy
DESCRIPTION
PricingTRANSCRIPT
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Pricing and Distribution
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Structure
A. INTRODUCTION
1. Overview and Strategy Blueprint
2. Marketing Strategy: Analysis &
perspectives
B. WHERE ARE WE NOW?
3. Environmental & Internal Analysis:
Market Information & Intelligence
C. WHERE DO WE WANT TO BE?
4. Strategic Marketing Decisions,
Choices & Mistakes
5. Segmentation, Targeting
& Positioning Strategies
6. Branding Strategies
7. Relational & Sustainability
Strategies
E. DID WE GET THERE?
14. Strategy Implementation, Control
& Metrics
D. HOW WILL WE GET THERE?
8. Product Innovation & Development
Strategies
9. Service Marketing Strategies
10. Pricing & Distribution
11. Marketing Communications
12. E-Marketing Strategies
13. Social and Ethical Strategies
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Learning
Objectives
Examine the separate and complementary roles
of pricing and distribution to marketing strategy.
Assess pricing mindsets and strategic options.
Evaluate the buyers perspective of distribution and its implications for strategy.
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Introduction
Pricing and distribution are distinct yet
complementary elements in marketing
Strategically they are difficult to separate.
The price of anything and the route by which it is
distributed simply reflects its value.
Porters two generic differentiation strategies:
Low cost leader
Differentiation
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Key Elements to Pricing
Value: Price is fundamentally about value. Customers place prices within the context of perceived value
Variable: Prices can be changed in a number of ways apart from the absolute level, such as by time form or terms of payment
Variety: Prices can be set at different levels across multiple products and services to achieve different objectives for positioning and contribution as with bundling or
unbundling items
Visible/Invisible: Prices may be open and visible or hidden and confusing for customers
Virtual: of all the decisions marketers make, a price change is arguably the easiest and quickest decision to make. It might not prove to be successful but the decision to raise or lower a price can be made quite straightforwardly in most
organisations
(Goldenberg, Horowitz, Levav and Mazursky, 2003)
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Successful
Pricing
Variations
in Value
Reverse
Cost-Plus
POS
Price
Sensitivity
Individual?
Bundled?
Competitor
Reaction
Emotion Customer
Costs
Strategic Options
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Target Pricing
Target pricing is a more novel approach to new product pricing.
The idea is to develop products and services from
the design stage and onwards with a final target
price objective for a particular market.
The main benefit is that target pricing is a
disciplined approach to pricing that brings the
reality of the market place throughout the entire
process, from idea conception to commercialization
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Human Capital cost of training and hiring people for pricing
Systems Capital Hardware and software required for pricing
Social Capital External participants who influence pricing
Companies need to invest in all three
capitals for pricing
strategy to work
Implementing Pricing Strategy
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Access
Search
Possession having
Transaction
C O N V E N I E N C E
Primary Concern of Buyers on
Distribution
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Distribution Options
Direct
Internet Telephone
Mail Catalogue
Own channel
Salesforce
Own Another firms
Contract
Intermediary
Franchise Wholesaler
Agent/Merchant Distributor
Partner
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Principal channels
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Price & Distribution
Appropriate strategies for price and distribution should be synchronised
Clearly it would be a mismatch to distribute high priced luxury handbags in discount stores and would only confuse potential buyers
The inherent brand position and direction must be taken into account
Market position is another factor. A follower brand with a relatively small market share is likely to follow the price and distribution patterns of leaders and generally be sold at a lower price and be placed in slightly less favourable positions by distributors
The product life cycle (PLC) is also a consideration. The PLC is a tool in widespread managerial use (despite its problems) given it ability to provide some strategic insights
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Market Leader Distribution in place Price main weapon
Premium price Variety of options
Market Niche Stay with markets
Add niches Premium price
Selective distribution
Market Challenger Focus on flanks
Direct or indirect attack
Market Follower Cloning
Set lower prices
Price & Distribution Strategies
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Conclusion
Value holds the key to both pricing and distribution
Buyers are savvy and smart, most markets are mature with products and services near (or at) parity and distribution channels are varied and largely accessible physically and/or virtually
Any strategies attempting to rip off or over charge will fail and longer-term trust will evaporate, particularly with the information rich web
As a consequence of these challenges, price and distribution are likely to remain key issues in marketing strategy in the immediate future