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Kotler • Keller

Phillip. Kevin Lane. Kotler • Keller. Marketing Management • 14e. Chapter 14. Developing Pricing Strategies and Programs. Discussion Questions. How do consumers process and evaluate prices? How should a company set prices initially for products or services?

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Kotler • Keller

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  1. Phillip Kevin Lane Kotler • Keller Marketing Management • 14e

  2. Chapter 14 Developing Pricing Strategies and Programs

  3. Discussion Questions • How do consumers process and evaluate prices? • How should a company set prices initially for products or services? • How should a company adapt prices to meet varying circumstances and opportunities? • When should a company initiate a price change? • How should a company respond to a competitor’s price change?

  4. Marketing Mix Revenue Producer Cost Promotion Place Cost Cost

  5. Pricing $31.50 $33.50 Bargaining

  6. Changing Price Environment Buyers I’ll pay $235.00 Instant Price Comparisons Get Products Free Name Your Own Price

  7. Changing Price Environment Sellers $29.99 $19.99 $24.99 Monitor Customers Negotiate Prices Selective Pricing

  8. How Companies Price Product-line Managers (w/guidance) Small Business Owner Pricing Department

  9. Consumer Psychology and Pricing Price-Quality Inferences Reference Prices $1.99 Price Endings

  10. A Black T-Shirt Armani - $275 Gap - $14.90 H&M - $7.90

  11. Setting the Price 6 Select Final Price 5 Price Method 4 Competitor Analysis 3 Estimate Costs 2 Determine Demand 1 Pricing Objective

  12. Selecting the Pricing Objective Survival Maximum Current Profit Maximum Market Share Maximum Market Skimming Product-Quality Leadership Other Objectives

  13. Determining Demand Price sensitivity Estimating demand curves Price Elasticity of Demand

  14. Figure 14.1 Inelastic and Elastic Demand

  15. Estimating Costs Demand Price Ceiling Price Price Floor Profit Costs

  16. Estimating Costs Types of costs Fixed Costs (overhead) Variable Costs Total Costs

  17. Figure 14.2 Costs at Varying Levels of Production

  18. Estimating Costs Accumulated Production Experience Curve (Learning Curve)

  19. Estimating Costs Target Costing Design engineers Market research

  20. Figure 14.3 The Experience Curve

  21. Analyzing Competitors’ Offers Price Costs Reaction “A” “B” Worth to Customer

  22. Selecting a Pricing Method • Pricing Methods • Markup • Target-return • Perceived-Value • Value • Going-rate • Auction-type

  23. Figure 14.4 High Price (No possible demand at this price) Ceiling priceCustomers’ assessment of unique product features Orienting point Competitors’ prices and prices of substitutes Costs Floor Price Three Cs Model for Price Setting Low Price (No possible profit at this price)

  24. Markup Pricing Variable cost per toaster $10 Fixed costs $300,000 Expected unit sales 50,000

  25. Target-Return Pricing

  26. Figure 14.5 Target-Return Pricing

  27. Perceived-Value Pricing • Customer’s perceived-value • Performance $$$ • Warranty $ • Customer support $ • Reputation $$

  28. Value Pricing EDLP Level of Quality THOUSANDS OF LOW PRICES EVERY DAY throughout the store High Pricing Low P1 C1 P2 C2

  29. Going-Rate Pricing Commodities Follow the Leader

  30. Auction Pricing English auction (ascending bids) Dutch auction (descending bids) Sealed-bid auction

  31. Selecting the Final Price Impact on others Brand Quality Pricing Policies Gain-and-risk-sharing

  32. Adapting the Price Geographic Pricing Differentiated Pricing Price Discounts and Allowances Promotional Pricing

  33. Dealing with Price Changes Raising Prices Cutting Prices Competitor Moves

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