pricing
TRANSCRIPT
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 13-24
What is the difference between pricing objectives and pricing constraints?
Pricing objectives involve specifying the role of price in an organization’s marketing and strategic plans whereas pricing constraints are factors that limit the range of prices a firm may set.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 13-13
• Pricing Objectives
Profit
• Maximizing for Long-Run Profits or Current Profit
• Target Return
Sales
Market Share
Unit Volume
Survival
Social Responsibility
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 13-17
• Pricing Constraints
Demand for the Product Class, Product, Brand
Single Product versus a Product Line
Newness of Offering: Stage in its Product Life Cycle
Cost of Producing and Marketing the Product
Characteristics of its Competitive Market
Competitors’ Prices
Price-Floor, and Price-Ceiling Assessments
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 13-22
Pricing, product, and advertising strategies available to firms in four types of competitive markets
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 13-26
• Demand Estimation
The Demand Curve
• Customer Psychographics - Choices/Preferences
• Price and Availability of Similar Products
• Consumer Income & Demographic factors
Movement Along Demand Curve v/s Shift of Demand Curve
Inputs/Intelligence to/from Forecasting
Price Elasticity of Demand
Cross-Elasticity of Demand
• Elastic v/s Inelastic Demand
• Product-Line Pricing: Substitutes v/s Compliments
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 13-28
Example: Demand Curves for Newsweek
Demand curve underinitial conditions
Shift in the demandcurve with more
favorable conditions
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Fundamental Revenue concepts
Slide 13-32
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Fundamental Cost concepts
Slide 13-41
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 14-7
Four approaches for selecting an approximate price level
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 14-8
• Demand-Oriented Pricing Strategies
Skimming Pricing
Penetration Pricing
Prestige Pricing
Price Lining
Odd-Even Pricing
Target Pricing
Bundle Pricing
Yield Management Pricing
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 14-9
Demand curves for two types of demand-oriented approaches
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 14-14
• Cost-Oriented Pricing Strategies
Standard Markup Pricing
Cost-Plus Pricing
• Cost-Plus Percentage-of-Cost Pricing
• Cost-Plus Fixed-Fee Pricing
Experience Curve Pricing
• Markup on Cost
• Markup on Selling Price
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 14-16
• Profit-Oriented Approaches
Target Profit Pricing
Target Return-On-Sales Pricing
Target Return-On-Investment Pricing
• Competition-Oriented Approaches
Customary Pricing / Fair-Market Pricing
Loss-Leader Pricing
Relational Adjustment/Flexible Pricing
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 14-29
Special Adjustments to List/Quoted Price
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slide 14-38
Price Fixing
• Legal and Regulatory Aspects of Pricing
• Horizontal Price Fixing v/s Vertical Price Fixing
• Collusion ; Rule of Reason ; Industry Norms
Price Discrimination
• Cost Justification Defense
• Meet-The-Competition Defense
Deceptive Pricing
Geographical Pricing
Predatory Pricing