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    Session 8

    Uploaded by

    Debdoot Ghosh
    The document discusses various factors involved in setting prices, including defining pricing objectives, determining demand through analyzing price elasticity, estimating costs, analyzing competitors' prices, and selecting a pricing method such as markup pricing or target-rate-of-return pricing. It also covers setting the final price through techniques like price discrimination based on customer segment, product form, channel, location, or time. The goal is to set a price that maximizes profits while considering costs, demand, and competitive landscape.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Session 8

    Uploaded by

    Debdoot Ghosh
    6 views14 pages
    The document discusses various factors involved in setting prices, including defining pricing objectives, determining demand through analyzing price elasticity, estimating costs, analyzing competitors' prices, and selecting a pricing method such as markup pricing or target-rate-of-return pricing. It also covers setting the final price through techniques like price discrimination based on customer segment, product form, channel, location, or time. The goal is to set a price that maximizes profits while considering costs, demand, and competitive landscape.

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    marketing pricing

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    The document discusses various factors involved in setting prices, including defining pricing objectives, determining demand through analyzing price elasticity, estimating costs, analyzing competitors' prices, and selecting a pricing method such as markup pricing or target-rate-of-return pricing. It also covers setting the final price through techniques like price discrimination based on customer segment, product form, channel, location, or time. The goal is to set a price that maximizes profits while considering costs, demand, and competitive landscape.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    6 views14 pages

    Session 8

    Uploaded by

    Debdoot Ghosh
    The document discusses various factors involved in setting prices, including defining pricing objectives, determining demand through analyzing price elasticity, estimating costs, analyzing competitors' prices, and selecting a pricing method such as markup pricing or target-rate-of-return pricing. It also covers setting the final price through techniques like price discrimination based on customer segment, product form, channel, location, or time. The goal is to set a price that maximizes profits while considering costs, demand, and competitive landscape.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 14

    MANAGING PRICING Dr.

    Indirah Indibara
    SESSION – 8
    PRICE
    Price
     What is given up in exchange for acquiring a good or service

    Pricing…
     Is influenced by company cost, competitive pricing and customers’ willingness to pay
     Usually can be tweaked
     May vary across segments and product lifecycle
     Sends signals to the market
     Influences your profitability
    CONSUMER PSYCHOLOGY &
    PRICING
    Reference Prices Image Pricing Pricing Cues
    SETTING THE PRICE

    Defining Analyzing Selecting a


    Determinin Estimating Setting the
    Pricing Competitors Pricing
    g Demand Costs Final Price
    Objectives ’ Prices Method
    1. DEFINING PRICING
    OBJECTIVE
    Short-term Profit Market Skimming
     Maximize current profits  High price strategy
     Based on Cost and Demand functions  Maximize market skimming

    Market Penetration Quality Leadership


     Low price strategy  Relatively high price
     Maximize market share
    2. DETERMINING
    DEMAND
    PRICE ELASTICITY
    PRICE ELASTICITY

    Q2  Q1
    Q1 P1 Q2  Q1 
    E 
    P2  P1 Q1 P2  P1 
    P1
    PRICE ELASTICITY
    Elastic example
    E = (400-100)/100 = 3/-0.375 = -8
    (5-8)/8

    Inelastic example
    E = (105-100)/100 = 0.05/-0.375 = -0.133
    (5-8)/8
    3. ESTIMATING COSTS
    Fixed, Variable and
    Total Costs

    Experience Curve
    Effects

    Break-Even Analysis
     Break-even Volume =
    Fixed Cost/(Price –
    Variable Cost)
    4. ANALYZING COMPETITORS’
    PRICES
    5. SELECTING A PRICING
    METHOD
    unit cost
    Markup Pricing Markup price 
    1  desired return on sales 

    desired return  invested capital


    Target-return price  unit cost 
    Target-Rate-of-Return Pricing unit sales

    Economic-Value-to-Customer Pricing

    Competitive Pricing (Going-Rate Pricing)

    Auction Pricing
    Markup Pricing Target-Rate-of-Return Pricing

    Let unit cost = $ 16 Let unit cost = $ 16


    Expected Unit Sales = 50000

    Assume the manufacturer wants to earn a Suppose the toaster manufacturer has
    20 per cent markup. Calculate the selling invested $1 million in the business and
    price per unit. wants to set a price to earn a 20 per cent
    ROI, specifically $200,000.

    Markup Price = 16/(1-0.2) = 16/0.8 = 20 Calculate the target-return price.

    Target Return Price =


    The manufacturer will charge dealers $20 16 + [(0.2*1000000)/50000] = 20
    per toaster and make a $4 per unit profit.
    6. SETTING THE FINAL PRICE
    Price Discrimination:
     When a company sells a product at two or more prices

     Customer-Segment Pricing
     Product-Form Pricing
     Channel Pricing
     Location Pricing
     Time Pricing

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