Pricing• Importance of pricing• Pricing strategies• Determinants of price• Pricing tactics
Importance of Pricing• Pricing mistakes – Overpricing – Underpricing • Pricing as an indicator of quality• Value...
Pricing Strategies• Generic strategies – Price leader – Price follower – Price nicher ...
Pricing Strategies• Circumstantial strategies – Penetration • Market share • Sales maximization – Skim...
Pricing Strategies• iPad $499• Kindle Fire $159
Pricing Strategies• Hyundai Sonata $20,000• Audi A7 $70,000
Determinants of Price• Internal – Costs • Variable costs • Fixed costs • Markup pricing • ...
Determinants of Price• Internal – Margins Retail price $5.00 (100%) (67%) Wholesale price ...
Determinants of Price• External – Gouging • Ethics • Invite in competition – Customers • Supply an...
Determinants of Price• External – Government • Price fixing – Horizontal (unfair trade practices, ...
Determinants of PriceGougingCompetitionCustomersGovernmentInternal
Pricing Tactics• Differential pricing – Single/variable price – Buy/lease – Second market discounting – ...
Pricing Tactics• Product line pricing – Captive pricing – Two-part pricing – Leader pricing • Bait/leader...
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Pricing+f2012

Published on: Mar 4, 2016
Source: www.slideshare.net


Transcripts - Pricing+f2012

  • 1. Pricing• Importance of pricing• Pricing strategies• Determinants of price• Pricing tactics
  • 2. Importance of Pricing• Pricing mistakes – Overpricing – Underpricing • Pricing as an indicator of quality• Value equation Benefits Value = Price – Pricing as exchange – Price parity not necessary – Value parity is necessary
  • 3. Pricing Strategies• Generic strategies – Price leader – Price follower – Price nicher Automated Broker- Online Phone Assisted Trades1 Trades Trades <120 trades2 per year AND $12.95 for Online Online $999,999 or first 1,000 commission commission less in shares5 + $5.00 + $25.00 household balances3 120+ trades4 per year OR Online Online $1,000,000+ $8.95 commission commission in + $5.00 + $25.00 household balances3
  • 4. Pricing Strategies• Circumstantial strategies – Penetration • Market share • Sales maximization – Skimming • Profit maximization • Milking
  • 5. Pricing Strategies• iPad $499• Kindle Fire $159
  • 6. Pricing Strategies• Hyundai Sonata $20,000• Audi A7 $70,000
  • 7. Determinants of Price• Internal – Costs • Variable costs • Fixed costs • Markup pricing • Break-even pricing B/E = FC P – VC B/E = $1,000,000 = 200,000 $10 - $5 B/E = $1,000,000 = 500,000 $7 - $5 B/E = $1,000,000 = 100,000 $15 - $5
  • 8. Determinants of Price• Internal – Margins Retail price $5.00 (100%) (67%) Wholesale price 3.00 (60%) (100%) Manufacturer’s price 1.50 (30%) (Base)
  • 9. Determinants of Price• External – Gouging • Ethics • Invite in competition – Customers • Supply and demand • Price elasticity of demand • Brand equity/reputation • Internet/price transparency – Competition • Strategy
  • 10. Determinants of Price• External – Government • Price fixing – Horizontal (unfair trade practices, restraint of trade) – Vertical • Price discrimination – Industrial goods – Quality, cost of service, performance of service • Predatory pricing • Deceptive pricing – Former price comparisons – Competitor comparisons – MSRP comparisons – Bait and switch
  • 11. Determinants of PriceGougingCompetitionCustomersGovernmentInternal
  • 12. Pricing Tactics• Differential pricing – Single/variable price – Buy/lease – Second market discounting – Periodic discounting/EDLP• Inflationary pricing – Increase price – Decrease quantity• Psychological pricing – Prestige pricing – Reference pricing – Odd/even pricing
  • 13. Pricing Tactics• Product line pricing – Captive pricing – Two-part pricing – Leader pricing • Bait/leader • Cherry picking – Price lining – Bundling – Multiple unit pricing

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