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    5a Price

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    wolfdrobe
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    3 views10 pages

    5a Price

    Uploaded by

    wolfdrobe

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 10

    WMG Full-Time Master’s Programmes

    Strategic Marketing

    The Marketing Mix


    Price

    Dave Harvey

    November 2019
    Selecting the Price…
    Influencing Factors: Selecting the Pricing Objective

    Corporate Objectives
    Determining Demand
    & Resources
    Portfolio Matrix
    Life-Cycle Estimating Costs
    Product Positioning
    Suppliers Prices
    Analysing Competitors Prices & Costs
    Competition
    Differential Benefits
    Selecting a Pricing Method
    Customer Attitudes
    Legal Constraints
    Selecting the Final Price

    2
    Price Elasticity…
    Ease of Switching
    Marketers need to know
    Moderstely
    how responsive, or
    elastic demand, would Very Elastic
    be to a change in price
    for their product.
    Easy
    If the demand hardly
    changes with a small Moderately
    change in price the Elastic
    demand is Inelastic

    If the demand changes


    considerably with a small
    change demand is Elastic
    Hard Inelastic
    Note Cross-elasticity of
    Demand! Seller’s Market Buyer’s Market

    Supply/Demand Conditions
    3
    Pricing Considerations…
    Pricing Basis Pricing Objectives Pricing Strategies

    Price Skimming

    The Link between Price Discounts


    Achieve Financial
    Costs and Prices
    Performance
    Price Signaling
    The Consumers’
    Position the
    Perception of Price Price Bundling
    Product
    The Demand Curve and Prices Price Leadership
    Stimulate Demand
    Competition and Price Discrimination
    Influence Competition
    Pricing
    Premium Pricing

    4
    Pricing Strategies…
    Economy pricing usually Penetration pricing refers to
    represents the lowest price a a marketing policy used by
    company can charge for goods businesses to attract
    or services. The economy customers to a new product
    pricing strategy can help or service. Penetration
    undercut current price levels of pricing is the practice of
    current competitors by offering offering an artificially low
    a similar product with no frills price for a new product or
    or fancy features. The costs of service during its initial
    marketing and promoting a offering in order to lure
    product are kept to a customers away from
    minimum. competitors.

    Price skimming is a product Premium pricing is the


    pricing policy by which a firm practice of setting a price
    charges the highest initial price higher than the market
    that customers will pay. As the Examples of other tactics: price, in the expectation
    Cost Plus Pricing
    demand of the first customers Mark Up/Margin Pricing
    that customers will
    is satisfied, the firm lowers the Second Market Discounting purchase it due to the
    price to attract another, more Predatory Pricing perception that it must
    “Grey Markets”
    price-sensitive segment. have unusually high quality
    or reputation.
    5
    Price - Quality Strategies…
    Price
    The company must set
    its price in relation to High Medium Low
    the value delivered and
    perceived by the
    customer e.g. Marriott Premium High Value Super Value
    High
    Strategy Strategy Strategy
    Hotels

    There can be Overcharging Medium Value Good Value


    competition between
    Quality Medium
    Strategy Strategy Strategy
    market segments - so
    competitors can co-
    exist as long as the
    market consists groups Low Rip-Off False Economy Economy
    Strategy Strategy Strategy
    of buyers who have
    different value seeking
    requirements

    6
    Pricing Strategies & the PLC…
    Guiding Principles:
    Introductory Growth Maturity
    Decline Stage
    Value of product to Stage Stage Stage

    customer not its cost of Plus-One

    production Key
    Competitive
    Account
    Different customer values Bid

    mean prices should be Segment


    Low Cost
    Harvest
    customised
    Perceived
    Total
    Should anticipate Value Penetration
    Market
    competitors reactions and Value-in-
    Sales
    Use
    their long run objectives Cost Plus

    Should be integrated with Skimming


    Floor
    company’s broad strategic
    positioning and goals
    Time Market Based Pricing Internal Based Pricing

    Price Consider
    Price low to
    competitively raising price Raise
    win high market
    to win as market price
    Share OR
    market share saturates
    Price high in
    recognition of
    7 novelty &
    prestige
    Impact of the Internet on Pricing…

    The internet is
    more than a new
    ‘market space, it is
    rapidly changing Buyers Sellers Both
    the rules of the • Get instant price • Monitor customer • Negotiate prices
    Marketing Mix comparisons behaviour and in online auctions
    and probably has tailor prices and
    the greatest • Name price and offers • Negotiate prices
    impact on Price have it met in exchanges e.g.
    • Give certain eBay
    • Get products for customers access
    free to special prices

    8
    Price - Relevant Questions…
    What pricing policies are appropriate?

    What is the best recommended retail price?

    Should price variations be established?

    How do consumers perceive prices…cost, investment, status, value for money, value?

    How effective are discounts and wholesale prices?

    9
    Discussion
     Think of some examples of products or services
    where price is used as a key indicator of quality
     Why do you think this is?

    10 07/07/2024

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