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Developing Pricing

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Strategies and Programs

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Marketing Management, 15th ed


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Assignments No 5

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• Compare the pricing strategies of Carrefour

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and Aoun Supermarket and share your

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findings with the class.

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• Answer Case Page : 512- 513 " Air Arabia"
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© Dr. A. Haidar FALL 17-18


In This In This Chapter, We Will Address

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the Following points:

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1. How do consumers process and evaluate prices? (p. 483)

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2. How should a company set prices initially for products or

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services? (p. 489)

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3. How should a company adapt prices to meet varying

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circumstances and opportunities? (p. 504)

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4. When and how should a company initiate a price change?
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(p. 507)
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5. How should a company respond to a competitor’s price


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change? (p. 509)


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© Dr. A. Haidar FALL 17-18


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Vs

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sell a value,

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Sell a product

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16-4
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Setting one price policy for all

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consumers Vs different prices for

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different consumers

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© Dr. A. Haidar FALL 17-18


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PRICING

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• Ryanair’s revolutionary pricing strategy

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charges a nominal airfare or even nothing

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for the seat,

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• It charges a fee for almost everything else
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involved in the flight.


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© Dr. A. Haidar FALL 17-18


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• Price is the one element of the marketing mix that

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produces revenue; ALL other elements produce

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costs.

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• Price communicates the company’s intended value

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positioning of its product or brand.

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• A well-designed and marketed product can still

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command a price premium and reap big profits.
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• New economic realities caused many consumers to
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reevaluate what they are willing to pay for products


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and services
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© Dr. A. Haidar FALL 17-18


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PRICING

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• Throughout most of history prices were set

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by negotiation between buyers and sellers.

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• Traditionally, price has operated as the

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major determinant of buyer choice.
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© Dr. A. Haidar FALL 17-18


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Understanding Pricing

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What Is Price?

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Bribe

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Rent Tuition

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Salary

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Fee Fare

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Wage

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Rate Toll
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Commission Premium
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Tax
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Assessment Retainer
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How Companies Price

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• In small companies, prices are often set by the boss

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• In large companies, pricing is handled by division

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and product-line managers

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• In large companies, top management sets general
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pricing objectives, policies, and


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© Dr. A. Haidar FALL 17-18


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Short list of how the Internet allows sellers to discriminate

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between buyers and buyers to discriminate between sellers.

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• Buyers can:

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• Get instant price comparisons from thousands

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of vendors.

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• mySimon.com.

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Intelligent shopping agents

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• prices, and reviews
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• Check prices at the point of purchase.


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• smart phones
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© Dr. A. Haidar FALL 17-18


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Short list of how the Internet allows sellers to discriminate

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between buyers and buyers to discriminate between sellers.

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• Buyers can:

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• Name their price and have it met.

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• On Priceline.com airline ticket, hotel, or rental car, and the site

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looks for any seller willing to meet that price.

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• Volume-aggregating sites combine the orders of many customers

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and press the supplier for a deeper discount.

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• Get products free. fo
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• free software movement started with Linux,


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• The biggest challenge is: How do you compete with programs that
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can be had for free?


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© Dr. A. Haidar FALL 17-18


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Short list of how the Internet allows sellers to discriminate

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between buyers and buyers to discriminate between sellers.

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• Sellers can:

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• Monitor customer behavior and tailor offers to

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individuals.

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• B-to-B customers,

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• Give certain customers access to special prices.
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limited-time sales, usually two-day events.
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© Dr. A. Haidar FALL 17-18


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Short list of how the Internet allows sellers to discriminate

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between buyers and buyers to discriminate between sellers.

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• Both buyers and sellers can:

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• Negotiate prices in online auctions and exchanges

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or even in person.

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• Post a sale on eBay.

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• OLX
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• half of U.S. adults reported bargaining for a better deal
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• 90 percent were successful at least once.


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© Dr. A. Haidar FALL 17-18


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Short list of how the Internet allows sellers to discriminate

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between buyers and buyers to discriminate between sellers.

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• successful tactics for bargaining:

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• I’d check competitor’s prices (57 % of respondents);

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• looked for lower prices at a walk-in store (57 %);

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• chatted with salesperson to make a personal connection

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(46 %);

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• used other store circulars or coupons as leverage (44 %);
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• checked user reviews to see what others paid (39 %).


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© Dr. A. Haidar FALL 17-18


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A Changing Pricing Environment

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• Pricing practices have changed significantly,

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• severe recession in 2008–2009,

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• millennial generation group (born 977 - 1994) phenomena

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• sharing economy “moving from economy world of

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ownership to economy world of access to assets.”
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• Bartering $12 billion annually in US. www.swap.com


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• Renting RentTheRunway 10% of Original price.


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© Dr. A. Haidar FALL 17-18


© Dr. A. Haidar FALL 17-18
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© Dr. A. Haidar FALL 17-18
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How Companies Price

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 Effectively designing and implementing pricing

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strategies requires a thorough understanding of

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consumer pricing psychology and a systematic

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approach to setting, adapting, and changing
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prices.
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© Dr. A. Haidar FALL 17-18


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Consumer Psychology and Pricing

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• Marketers recognize that consumers often actively

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process price information, interpreting prices in terms

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of their knowledge from

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• prior purchasing experiences,

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• formal communications, and

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• point-of-purchase or

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• online resources. fo
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• Purchase decisions are based on how consumers


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perceive prices.
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© Dr. A. Haidar FALL 17-18


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Consumer Psychology and Pricing

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• Consumers consider the current actual price—not the

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marketer’s stated price.

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• Consumers may have a lower price threshold below

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which prices may signal inferior or unacceptable quality.

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• Upper price threshold above which prices are prohibitive

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and seen as not worth the money
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• Compare Armani, Gap & H&M


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© Dr. A. Haidar FALL 17-18


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Consumer Psychology and Pricing

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upper price threshold

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lower price threshold


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Consumer Psychology

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and Pricing

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© Dr. A. Haidar FALL 17-18


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Reference Prices

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• When examining products,

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prices.

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• In considering an observed price,

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consumers often compare it to an

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internal reference price (pricing

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from memory).
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• An external frame of reference


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(“regular retail price”).


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© Dr. A. Haidar FALL 17-18


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Reference Prices

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• All types of reference prices are possible.

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• fair price,

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• typical price,

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• last price paid,

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• competitor price,

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usual discounted price,
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expected price
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• reference prices creates “unpleasant surprises”


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which can have a greater impact on purchase


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© Dr. A. Haidar FALL 17-18


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Price-Quality Inferences

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• Many consumers use price as an indicator of

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quality

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• Some companies adopt exclusivity and scarcity to

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justify premium prices

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• Tiffany & Co (affordable luxury Vs Louis Vuitton)
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© Dr. A. Haidar FALL 17-18


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Despite booming demand, Ferrari limits production and the number of

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sports cars that it sells to maintain the brand's exclusivity.

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© Dr. A. Haidar FALL 17-18


© Dr. A. Haidar FALL 17-18
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Figure 16.1: Nine Price-Quality Strategies

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© Dr. A. Haidar FALL 17-18


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Price Endings

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• Many sellers believe that prices should end in an

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odd number. (299)

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• Research has shown that consumers tend to

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process prices in a “left-to-right” manner rather

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than by rounding.

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• Pricing cues like “sale” signs and prices that end in
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a 9 are less effective the more they are employed.


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© Dr. A. Haidar FALL 17-18


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SETTING THE PRICE

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 A firm must set a price for the first time when:

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 it develops a new product,

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 introduces its regular product into a new

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distribution channel or geographic area,

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 it enters bids on new contract work.
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© Dr. A. Haidar FALL 17-18


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SETTING THE PRICE

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 The firm must decide where to position its product

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on quality and price.

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 Most marketers have 3–5 price points or tiers.

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 The firm has to consider many factors in setting its
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pricing policy.
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© Dr. A. Haidar FALL 17-18


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Firms have 3–5 price points or tiers

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• Marriott Hotels is good at developing different brands

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or variations of brands for different price points:

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1. Marriott Vacation Club—Vacation Villas (highest price),

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2. Marriott Marquis (high price),

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3. Marriott (high-medium price),

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4. Renaissance (medium-high price),
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5. Courtyard (medium price),
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6. Towne Place Suites (medium-low price), and


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7. Fairfield Inn (low price)


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© Dr. A. Haidar FALL 17-18


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Nine Price-Quality Strategies

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Steps in Setting Price

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© Dr. A. Haidar FALL 17-18


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Step 1: Selecting the Pricing Objective

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i. Survival

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ii. Maximum current profit

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iii. Maximum market share

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iv. Maximum market skimming
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v. Product-quality leadership
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© Dr. A. Haidar FALL 17-18


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Step 1: Selecting the Pricing Objective

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• Survival: if firms are plagued with overcapacity, intense

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competition, or changing consumer wants.

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• maximize current profits. Firms estimate the demand and

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costs associated with alternative prices and choose the

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price that produces maximum current profit, cash flow,
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or rate of return on investment
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© Dr. A. Haidar FALL 17-18


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Step 1: Selecting the Pricing Objective

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• maximize market share/use market-penetration

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pricing

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• The market is highly price sensitive and a low price stimulates

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market growth

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• Production and distribution costs fall with accumulated
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production experience
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• Low price discourages actual and potential competition.


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© Dr. A. Haidar FALL 17-18


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Step 1: Selecting the Pricing Objective

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• maximize market skimming unveiling a new technology

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(prices start high and slowly drop over time).

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• Fatal if a worthy competitor decides to price low.

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• Consumers who buy early at the highest prices may be dissatisfied if

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they compare themselves with those who buy later at a lower price.

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• A sufficient number of buyers have a high current demand

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• The unit costs of producing a small volume are high enough to cancel
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the advantage of charging what the traffic will bear
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• The high initial price does not attract more competitors to the market
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• The high price communicates the image of a superior product.


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© Dr. A. Haidar FALL 17-18


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Step 1: Selecting the Pricing Objective

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• Product-quality leader in the market “affordable

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luxuries” firms produce products or services

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characterized by high levels of perceived quality,

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taste, and status with a price just high enough not

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to be out of consumers’ reach.

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• Nonprofit and public organizations may have other pricing
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objectives
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© Dr. A. Haidar FALL 17-18


Step 2: Determining Demand

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Each price will lead to a different level of demand and

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therefore have a different impact on a company’s

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marketing objectives.

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Price Sensitivity

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Estimating

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Demand Curves

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Price Elasticity
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of Demand
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© Dr. A. Haidar FALL 17-18


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Price Sensitivity

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 The demand curve shows the market’s probable purchase

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quantity at alternative prices.

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 The first step in estimating demand is to understand what

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affects price sensitivity.

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 customers are most price-sensitive to products that cost
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a lot or are bought frequently.
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© Dr. A. Haidar FALL 17-18


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Price Sensitivity

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 Customers are less price-sensitive to

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low-cost items or items they buy infrequently;

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when price is only a small part of the total cost of obtaining,

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 There are few or no substitutes or competitors;

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They do not readily notice the higher price;

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 They are slow to change their buying habits;

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 r
They think the higher prices are justified;
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 Companies prefer customers who are less price-


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sensitive.
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© Dr. A. Haidar FALL 17-18


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Table 16.3 Factors That Reduce Price Sensitivity

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 Tom Nagle offers this list of Factors That Reduce Price

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Sensitivity

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 The product is more distinctive

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 Buyers are less aware of substitutes

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 Buyers cannot easily compare the quality of substitutes

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 The expenditure is a smaller part of the buyer’s total income

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 The expenditure is small compared to the total cost of the end product

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 Part of the cost is borne by another party
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The product is used in conjunction with assets previously bought
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 The product is assumed to have more quality, prestige, or exclusiveness


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 Buyers cannot store the product


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16-45
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Estimating Demand Curves

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• Most companies attempt to measure their demand curves

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using several different methods.

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• Surveys can explore how many units consumers would buy

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at different proposed prices.

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• Price experiments can vary the prices of different products

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to see how the change affects sales.
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• Statistical analysis of past prices, quantities sold, and other
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factors can reveal their relationships.


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© Dr. A. Haidar FALL 17-18


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Figure 14.2 Inelastic and

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Elastic Demand

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Step 3: Estimating Costs

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 Demand sets a ceiling on the price

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the company can charge for its

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product. Costs set the floor.

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Accumulated

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Production

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Activity-Based

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Cost Accounting
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Target Costing
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© Dr. A. Haidar FALL 17-18


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Cost Terms and Production

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i. Fixed costs, or overhead, are costs that do not

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vary with production level or sales revenue.

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ii. Variable costs vary directly with the level of

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production.

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iii. Total costs consist of the sum of the fixed and

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variable costs for any given level of

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production.
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iv. Average cost is the cost per unit at that level


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of production; it equals total costs divided by


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production.
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© Dr. A. Haidar FALL 17-18


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Activity-Based Accounting (ABC)

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• Estimation of the real profitability of dealing with

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different retailers,

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• ABC accounting tries to identify the real costs

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associated with serving each customer.

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• The key to effectively employing ABC is to define
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and judge “activities” properly.
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• Clerical, office expenses, services etc..


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© Dr. A. Haidar FALL 17-18


Accumulated cost

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• Accumulated production reduces costs; the experience

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curve or learning curve improves processes

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• Aggressive pricing might give the product a cheap image

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or assume competitors are weak followers.

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© Dr. A. Haidar FALL 17-18


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Fig. 16.3 Cost per Unit as a Function of Accumulated

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Production: The Experience Curve Figure

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or Learning

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© Dr. A. Haidar FALL 17-18


Accumulated cost

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• Costs change with production scale and experience.

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• Cost change as a result of a concentrated effort by

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designers, engineers, and purchasing agents to reduce

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them through target costing.

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• Cost cutting cannot go so deep as to compromise the
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brand promise and value delivered.


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© Dr. A. Haidar FALL 17-18


8
-1
Experience-curve pricing

17
LL
FA
 It carries major risks.

@
s
nt
de
 Aggressive pricing might give the product a cheap image.

tu
rS
da
ai
H
 The strategy assumes that competitors are weak followers.

A.
r.
Dr
fo
 Most experience-curve pricing has focused on manufacturing
D
TE

costs, but all costs can be improved on, including marketing


IC
TR

costs
ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Target Costing

17
LL
FA
 Costs as a result of a concentrated effort by

@
s
nt
designers, engineers, and purchasing agents to

de
tu
reduce them through target costing.

rS
da
ai
 The objective is to bring the final cost projections into

H
A.
the target cost range.

r.
Dr
fo
 Cost cutting cannot go so deep as to compromise the
D
TE

brand promise and value delivered.


IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


Overly aggressive cost-cutting actions resulted in

8
-1
declines in perceived quality for the PT Cruiser,

17
LL
helping to contribute to the brand's demise.

FA
@
s
nt
de
tu
rS
da
ai
H
A.
r.
Dr
fo
D
TE
IC
TR
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© Dr. A. Haidar FALL 17-18


Step 4: Analyzing Competitors’ Costs,

8
-1
17
Prices, and Offers

LL
FA
@
 The firm should first consider the nearest competitor’s price.

s
nt
• The firm’s should evaluate the worth of features

de
tu
rS
offered or not offered by the nearest competitor. (add

da
ai
or subtract the value of features from price).

H
A.
r.
• The firm can decide whether it can charge more, the
Dr
fo
same, or less than the competitor.
D
TE
IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


Step 4: Analyzing Competitors’ Costs,

8
-1
17
Prices, and Offers

LL
FA
@
s
 The introduction of any price or the change of any existing

nt
de
tu
price can provoke a response from customers, competitors,

rS
distributors, suppliers, and even the government.

da
ai
H
 Firms should watch Value-priced competitors.

A.
r.
D
 The firm can decide whether it can charge more, the same,
fo
r
D

or less than the competitor.


TE
IC
TR
ES
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© Dr. A. Haidar FALL 17-18


8
-1
Step 5: Selecting a Pricing Method

17
LL
FA
@
i. Markup pricing

s
nt
de
ii. Target-return pricing

tu
rS
iii. Perceived-value pricing

da
ai
H
iv. Value pricing

A.
r.
v. Going-rate pricing
Dr
fo
vi. Auction-type pricing
D
TE
IC
TR
ES

Fig. 16.4: The Three Cs


R

Model for Price Setting


© Dr. A. Haidar FALL 17-18
8
-1
Mark up pricing

17
LL
FA
@
s
nt
 UNIT COST = variable cost + Fixed cost

de
tu
unit sales

rS
da
ai
H
 Mark up price = Unit cost

A.
r.
1- desired return on sale
Dr
fo
D
TE
IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Target-Return Pricing

17
LL
FA
• The firm determines the price that yields its target rate

@
s
nt
of return on investment. (20% ROI)

de
tu
rS
da
• The target-return price is given by the following

ai
H
A.
formula:

r.
unit cost + desired return x invested capital

D
• Target-return price = fo
r
D
unit sales
TE
IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Figure 16.5 Break-Even Chart

17
LL
FA
@
s
nt
de
tu
rS
da
ai
H
A.
r.
Dr
fo
D
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IC
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© Dr. A. Haidar FALL 17-18


8
-1
Perceived Value Pricing

17
LL
FA
• Companies base their price on the value promised by their value proposition,

@
and the customer must perceive this value or image of the product performance,

s
nt
the channel deliverables, the warranty quality, customer support, and softer

de
tu
attributes such as the supplier’s reputation, trustworthiness, and esteem

rS
 Buyer’s image of the product performance

da
 Channel deliverables

ai
H
 The warranty quality

A.
 Customer support

r.
D
 Supplier’s reputation
r
fo
 Trustworthiness
D
TE

 Esteem
IC

• The key to perceived-value pricing is to deliver more value than the competitor
TR

and to demonstrate this to prospective buyers.


ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Perceived Value Pricing

17
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FA
@
s
nt
de
tu
rS
da
ai
H
A.
r.
Dr
fo
D
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IC
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© Dr. A. Haidar FALL 17-18


8
-1
Value Pricing

17
LL
FA
 Companies win loyal customers by charging a fairly low

@
price for a high-quality offering.

s
nt
 Value pricing is not a matter of simply setting lower

de
tu
prices.

rS
da
 It is a matter of reengineering the company’s

ai
H
operations to become a low-cost producer without

A.
r.
sacrificing quality.
Dr
fo
 Lowering pricings significantly helps to attract a
D
TE

large number of value-conscious customers.


IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
Everyday low pricing (EDLP)

-1
17
LL
FA
@
s
• EDLP charging a constant low price with little or no price

nt
de
tu
promotion or special sales.

rS
da
ai
H
A.
• High-low pricing, the retailer charges higher prices on an

r.
Dr
fo
everyday basis but runs frequent promotions with prices
D
TE

temporarily lower than the EDLP level.


IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Going-Rate Pricing

17
LL
FA
@
 Firms base prices largely on competitor’s prices, follows

s
nt
de
the market leader.

tu
rS
da
 Firms might charge the same, more, or less than major

ai
H
competitor (s).

A.
r.
Dr
fo
 Going-rate pricing is quite popular where costs are
D
TE

difficult to measure or competitive response is uncertain.


IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Auction-Type Pricing

17
LL
FA
• Growing more popular, (electronic marketplaces selling everything).

@
• These are the three major types of auctions

s
nt
de
tu
rS
i. English auctions (ascending bids)

da
ai
English auctions are used today for selling antiques, cattle, real estate, and used

H
equipment and vehicles.

A.
r.
Dr
ii. Dutch auctions (descending bids.
fo
D

business-to-business auctions to help companies acquire low-priced items


TE
IC
TR

iii.Sealed-bid auctions (governments)


ES
R

© Dr. A. Haidar FALL 17-18


8
Auction-Type Pricing

-1
17
LL
FA
• English auctions (ascending bids) have one seller and many buyers. On sites

@
such as eBay and Amazon.com, the seller puts up an item and bidders raise

s
their offer prices until the top price is reached.

nt
de
• English auctions are used today for selling antiques, cattle, real estate, and

tu
used equipment and vehicles.

rS
da
ai
• Dutch auctions (descending bids) feature one seller and many buyers or one

H
A.
buyer and many sellers. In the first kind, an auctioneer announces a high price

r.
for a product and then slowly decreases the price until a bidder accepts. In the

D
other, the buyer announces something he or she wants to buy, and potential
r
fo
sellers compete to offer the lowest price.
D
TE

• business-to-business auctions to help companies acquire low-priced items


IC
TR

• Sealed-bid auctions let would-be suppliers submit only one bid; they cannot
ES

know the other bids. (governments)


R

© Dr. A. Haidar FALL 17-18


8
-1
Step 6: Selecting the Final Price

17
LL
FA
@
s
nt
de
tu
i. Impact of other marketing activities

rS
da
ii. Company pricing policies

ai
H
iii. Gain-and-risk sharing pricing

A.
r.
iv. Impact of price on other parties
Dr
fo
D
TE
IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Price-Adaptation Strategies

17
LL
FA
@
Geographical Pricing

s
nt
de
tu
rS
Discounts/Allowances

da
ai
H
A.
Promotional Pricing

r.
Dr
fo
D

Differentiated Pricing
TE
IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Price-Adaptation Strategies

17
LL
FA
• Companies develop a pricing structure that

@
s
reflects variations in:

nt
de
tu
i. geographical demand and costs,

rS
da
ii. market-segment requirements,

ai
H
iii. purchase timing,

A.
r.
iv. order levels,
Dr
fo
v. delivery frequency,
D
TE

vi. guarantees,
IC
TR

vii. service contracts, and other factors.


ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Price-Adaptation Strategies

17
LL
FA
 how to price its products to

@
s
nt
different customers in

de
Countertrade

tu
different locations and

rS
• Barter

da
countries.

ai
• Compensation deal

H
A.
• Buyback arrangement

r.
 how to get paid in the
D
fo
r • Offset
absence of sufficient hard
D
TE

currency
IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


In the early days of its entry into the Russian market,

8
-1
PepsiCo used an offset agreement with the Russian

17
LL
government involving a swap of cola syrup for vodka.

FA
@
s
nt
de
tu
rS
da
ai
H
A.
r.
Dr
fo
D
TE
IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Price-Adaptation Strategies

17
LL
FA
@
s
nt
de
tu
rS
da
ai
H
A.
r.
Dr
fo
D
TE
IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Promotional Pricing Tactics

17
LL
FA
@
s

nt
Loss-leader pricing

de
tu
 Special-event pricing

rS
da
 Cash rebates

ai
H
 Low-interest financing

A.
r.
 Longer payment terms
Dr
fo
 Warranties and service contracts
D
TE

 Psychological discounting
IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Differentiated Pricing

17
LL
FA
@
s

nt
Customer-segment pricing

de

tu
Product-form pricing

rS

da
Image pricing

ai
H
 Channel pricing

A.
r.
 Location pricing
Dr
fo
 Time pricing
D
TE
IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
INITIATING AND RESPONDING TO PRICE

-1
17
CHANGES

LL
FA
@
s
nt
• Companies often face situations when they

de
tu
rS
may need to cut or raise prices.

da
ai
H
A.
r.
Dr
fo
D
TE
IC
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Initiating Price Cuts

17
LL
FA
• Several circumstances might lead a firm to cut prices:

@
• Excess plant capacity

s
nt
• Companies may initiate a price cut in a drive to dominate the

de
tu
market through lower costs.

rS
• Either the company starts with lower costs or initiates price cuts

da
ai
in hope of gaining market share and lower costs.

H
A.
• A price-cutting strategy involves possible traps:

r.
D
• Low-quality trap
r
fo
D

• Fragile-market-share trap
TE
IC

• Shallow-pockets trap
TR
ES
R

© Dr. A. Haidar FALL 17-18


8
-1
Initiating and Responding to Price Changes

17
LL
FA
@
• Initiating Price Increases

s
nt
de
• Cost inflation

tu
rS
• Anticipatory pricing

da
ai
• Overdemand

H
A.
• Delayed quotation pricing
r.
• Dr
fo
Escalator clauses
D
TE

• Unbundling
IC
TR

• Reduction of discounts
ES
R

16-80
Initiating and Responding to Price Changes

8
-1
17
LL
FA
Possible responses to higher costs or overhead without

@
raising prices include:

s
nt
de
• Shrinking the amount of product instead of raising the price

tu
rS
• Substituting less expensive materials or ingredients

da
ai
• Reducing or removing product features

H
A.
• Removing or reducing product services, such as installation or

r.
D
free delivery
r
fo
D

• Using less expensive packaging material or larger package sizes


TE
IC

• Reducing the number of sizes and models offered


TR
ES

• Creating new economy brands


R

16-81
8
-1
Initiating and Responding to Price Changes

17
LL
FA
• Reactions to Price Changes

@
s
• Customer Reactions

nt
de
• Competitor Reactions

tu
rS
• Responding to Competitors’ Price Changes

da
ai
• Maintain price

H
A.
• Maintain price and add value

r.
Dr
• Reduce pricefo
D

• Increase price and improve quality


TE
IC

• Launch a low-price fighter line


TR
ES
R

16-82
8
Price-Reaction Program for Meeting a Competitor’s Price Cut

-1
17
LL
FA
@
s
nt
de
tu
rS
da
ai
H
A.
r.
Dr
fo
D
TE
IC
TR
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16-83