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,Click to edit Master title style,Click to edit Master text styles,Second Level,Third Level,Fourth Level,Fifth Level,#,Designing Pricing,Strategies and,Programs,Objectives,Setting the Price,Adapting the Price,Initiating&Responding to Price Changes,Price,High,Medium,Low,High,Low,Product Quality,Med,Premium,Value,Medium,Value,Economy,Overcharging,Rip-Off,False,Economy,High,Value,Super,Value,Good-Value,Price-Quality Strategies,Setting Pricing Policy,1.,Selecting the pricing,objective,2.,Determining demand,3.,Estimating costs,4.,Analyzing competitors,costs,prices,and offers,5.,Selecting a pricing,method,6.,Selecting final price,Types of Costs,Total Costs,Sum of the Fixed and Variable Costs for a Given,Level of Production,Fixed Costs,(Overhead),Costs that,dont,vary with sales or,production levels.,Executive Salaries,Rent,Variable Costs,Costs that,do,vary,directly with the,level of production.,Raw materials,The Three Cs Modelfor Price Setting,Costs,Competitors,prices and,prices of,substitutes,Customers,assessment,of unique,product,features,Low Price,No possible,profit at,this price,High Price,No possible,demand at,this price,Pricing Methods,Markup Pricing,Target Return Pricing,Perceived Value Pricing,Value Pricing,Going-Rate Pricing,Sealed-Bid Pricing,Some important pricing definitions,Utility:The attribute that makes it capable of want satisfaction,Value:The worth in terms of other products,Price:The monetary medium of exchange.,Value Example,:,Caterpillar,Tractor is,$100,000,vs.Market,$90,000,$90,000 if equal,7,000 extra durable,6,000 reliability,5,000 service,2,000,warranty,$110,000 in benefits-,$10,000 discount!,Promotional Pricing,Loss-leader pricing,Special-event pricing,Cash rebates,Low-interest financing,Longer payment terms,Warranties&service contracts,Psychological discounting,Psychological Pricing,Most Attractive?,Better Value?,Psychological reason to price this way?,A,32 oz.,$2.19,B,26 oz.,$1.99,Assume Equal Quality,Discriminatory Pricing,Time,Product-form,Customer,Segment,Location,Price-Reaction Program for Meeting a Competitors Price Cut,Has competitor,cut his price?,No,Hold our price,at present level;,continue to watch,competitors,price,Is the price,likely to,significantly,hurt our sales?,Yes,Is it likely to be,a permanent,price cut?,Yes,By more than 4%,Drop price to,competitors,price,By 2-4%,Drop price by,half of the,competitors,price cut,How much has,his price been,cut?,Yes,No,No,By less than 2%,Include a,cents-off coupon,for the next,purchase,Psychological Pricing,Most Attractive?,Better Value?,Psychological reason to price this way?,A,32 oz.,$2.19,B,26 oz.,$1.99,Assume Equal Quality,Discriminatory Pricing,Time,Product-form,Customer,Segment,Location,Price-Reaction Program for Meeting a Competitors Price Cut,Has competitor,cut his price?,No,Hold our price,at present level;,continue to watch,competitors,price,Is the price,likely to,significantly,hurt our sales?,Yes,Is it likely to be,a permanent,price cut?,Yes,By more than 4%,Drop price to,competitors,price,By 2-4%,Drop price by,half of the,competitors,price cut,How much has,his price been,cut?,Yes,No,No,By less than 2%,Include a,cents-off coupon,for the next,purchase,
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