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A South Asian Perspective: Marketing Management, 12/e

The document discusses developing pricing strategies and programs. It covers topics like how consumers process prices, setting initial prices, adapting prices over time, and responding to competitors. The chapters provide guidance on determining pricing objectives, estimating demand and costs, selecting pricing methods, and adapting prices based on factors like location, time, and customer segments. Readers learn about common pricing mistakes to avoid and strategic pricing approaches like promotional pricing, price discrimination, and how brand leaders can respond to price cuts.

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prayank jain
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94 views23 pages

A South Asian Perspective: Marketing Management, 12/e

The document discusses developing pricing strategies and programs. It covers topics like how consumers process prices, setting initial prices, adapting prices over time, and responding to competitors. The chapters provide guidance on determining pricing objectives, estimating demand and costs, selecting pricing methods, and adapting prices based on factors like location, time, and customer segments. Readers learn about common pricing mistakes to avoid and strategic pricing approaches like promotional pricing, price discrimination, and how brand leaders can respond to price cuts.

Uploaded by

prayank jain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Marketing Management, 12/e

A South Asian Perspective

14
Developing Pricing
Strategies and
Programs

Kotler Koshy
Keller Jha
Chapter 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 challenge?

14-2
Synonyms for Price
 Rent  Special assessment
 Tuition  Bribe
 Fee  Dues
 Fare  Salary
 Rate  Commission
 Toll  Wage
 Premium  Tax
 Honorarium

14-3
Common Pricing Mistakes
 Determine costs and take traditional industry
margins
 Failure to revise price to capitalize on market
changes
 Setting price independently of the rest of the
marketing mix
 Failure to vary price by product item, market
segment, distribution channels, and purchase
occasion

14-4
Consumer Psychology and Pricing
 Reference prices
 Price-quality inferences
 Price endings
 Price cues

14-5
Table 14.1 Possible Consumer Reference
Prices
 “Fair price”  Lower-bound price
 Typical price  Competitor prices
 Last price paid  Expected future price
 Upper-bound price  Usual discounted
price

14-6
Table 14.2 Consumer Perceptions vs.
Reality for Cars
Overvalued Brands Undervalued Brands
 Land Rover  Mercury
 Kia  Infiniti
 Volkswagen  Buick
 Volvo  Lincoln
 Mercedes  Chrysler

14-7
Price Cues
 “Left to right” pricing (Rs. 2999 versus
Rs. 3000)
 Odd number discount perceptions
 Even number value perceptions
 Ending prices with 0 or 5
 “Sale” written next to price

14-8
When to Use Price Cues
 Customers purchase item infrequently
 Customers are new
 Product designs vary over time
 Prices vary seasonally
 Quality or sizes vary across stores

14-9
Steps in Setting Price
 Select the price objective
 Determine demand
 Estimate costs
 Analyze competitor price mix
 Select pricing method
 Select final price

14-10
Step 1: Selecting the Pricing Objective
 Survival
 Maximum current profit
 Maximum market share
 Maximum market skimming
 Product-quality leadership
 Other Objectives

14-11
Step 2: Determining Demand
 Price sensitivity
 Estimating demand curves
 Price elasticity of demand

14-12
Step 3: Estimating Costs
 Types of Costs
 Accumulated Production
 Activity-Based Cost Accounting
 Target Costing

14-13
Cost Terms and Production
 Fixed costs
 Variable costs
 Total costs
 Average cost
 Cost at different levels of production

14-14
Step 5: Selecting a Pricing Method
 Markup pricing
 Target-return pricing
 Perceived-value pricing
 Value pricing
 Going-rate pricing
 Auction-type pricing

14-15
Auction-Type Pricing
 English auctions
 Dutch auctions
 Sealed-bid auctions

14-16
Step 6: Selecting the Final Price
 Impact of other marketing activities
 Company pricing policies
 Gain-and-risk sharing pricing
 Impact of price on other parties

14-17
Price-Adaptation Strategies
 Geographical pricing
 Discounts/allowances
 Promotional pricing
 Differentiated pricing

14-18
Price-Adaptation Strategies
Countertrade Discounts/ Allowances
 Barter  Cash discount
 Compensation deal  Quantity discount
 Buyback arrangement  Functional discount
 Offset  Seasonal discount
 Allowance

14-19
Promotional Pricing Tactics
 Loss-leader pricing
 Special-event pricing
 Cash rebates
 Low-interest financing
 Longer payment terms
 Warranties and service contracts
 Psychological discounting

14-20
Differentiated Pricing and Price Discrimination

 Customer-segment pricing
 Product-form pricing
 Image pricing
 Channel pricing
 Location pricing
 Time pricing
 Yield pricing

14-21
Increasing Prices
 Delayed quotation pricing
 Escalator clauses
 Unbundling
 Reduction of discounts

14-22
Brand Leader Responses to Competitive
Price Cuts

 Maintain price
 Maintain price and add value
 Reduce price
 Increase price and improve quality
 Launch a low-price fighter line

14-23

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