Chapter 13 Pricing Strategies.ppt

Chapter 13: Pricing Strategies Goals: Generate ____________; ___________ Offer ________ Respond to _______________ Chapter 13: Pricing Strategies At “what prices are people _______ to pay and still feel they are receiving ______ _________?” Example of Achieving Price Goals Major Considerations in Setting Price Example: Offer Value Demographic factors Family size, income level, location of potential buyers, etc. Psychological factors Psychological Pricing Considers the psychology of prices and not simply the economics. Customers use price ____ when they can judge quality of a product. Price becomes an important quality signal when customers can’t judge quality; price is used to say something about a product. Example: Offer Value Prestige pricing: high price is charged to create signal that the product is exceptionally fine Example: Offer Value Product-bundling pricing: several products sold together at a single price to suggest good value Example: Offer Value Price Elasticity: how ___________ are consumers to changes in price? type of product; competitor prices Price of convenience goods: ____________ Price of prescription drugs: ______________ Price of Super Bowl tickets Generate Sales/Profits; Cover Costs Cost considerations: cost of raw materials, production, distribution, labor, etc. ______________: adding a percentage to cost of product to determine final selling price Types of Cost Factors that Affect Pricing Decisions Example: Respond to Competition Competition: Are our prices competitive? Going-rate pricing: pricing product at competition (average price charged by the industry) Homogeneous products: Conclusion Does pricing strategy account for: Customer – Costs – Competition - * Marketing Objectives Survival _________ Hoping to Increase Demand. Current Profit Maximization Choose the Price that Produces the ________ Current Profit, Etc. Market Share Leadership Low as Possible Prices to Become the Market Share Leader. P