Pricing

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  • Created by: diabianca
  • Created on: 28-04-14 12:49
Price (4 characteristics)
• Generates revenue (only one in the marketing mix) • Competitive tool in dealing with competitors (means of attracting and communicating an offer) • Positions the product in the market • Pricing decisions can’t be made in isol
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Price changes occur when (3)
• New product launch • Market conditions Δ • Internal situation Δ
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In multiple-product pricing, items are priced indicating: (3)
• An economy version • Standard version • A top-of-the-line version
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Why is pricing getting scary?
customers know the products more than the marketers, info available so easier price comparisons (scanning), automatic refunds;low redemption rates
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Pricing Research: Customers are currently impacted as follows: (3)
- Value seeking - Technology enabled shopping - Frugal spending in anticipation of income declines
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Pricing strategies (6)
1) Skimming 2) Market pricing 3) Penetration pricing 4) Product line pricing 5) Relationship pricing 6) Dynamic pricing
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Skimming (2)
• achieve the highest possible contribution in a short time period • lower the price as more segments are targeted & more products made available
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Market pricing (2)
• Based on competitive prices; Reactive • Production and marketing is adjusted to the price
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Penetration pricing
• Low pricing for volume sales
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Product line pricing
• Sell 1 element of the line cheaply to stimulate sales
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Relationship pricing
• Flexibility to modify pricing to develop long term relationship
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Dynamic pricing (w/ Ex.)
• fluctuating subject to demand • Ex. Web: monitor customer behavior, tailor offers; price comparisons; negotiate & change prices on the fly
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Set export prices: 3 Factors to consider
Importance of price in customer decision making Strength of perceived price-quality relationships Potential reactions to marketing-mix manipulation
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Stages in Setting Export Prices (3)
1) Look externally & internally 2) Select pricing policy & pricing strategy 3) Set specific price.
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In setting export prices, look at the ff. factors (2):
1) Customer purchase factors • ability-to-pay, pq relationship, rxn to mktg mix, mkt support 2) Pricing policies factors • ROI, Survival, π maximization • Competitive policies • Market share
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Export pricing strategies (3)
1) Standard worldwide price 2) Dual pricing 3) Market-differentiated pricing
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Standard worldwide price
: based on average unit costs of fixed, variable & export-related costs
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Dual pricing
differentiates between domestic & export prices
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Market-differentiated pricing
different pricing in different markets
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Export-related costs (3)
1) product modification cost 2) export operational costs 3) entry costs
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Price escalation (2)
• Combined effect of clear & hidden costs • Increase in export prices over & above the domestic prices
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Combat price escalation (4)
• Reorganize the distribution channel • Product adaptation • Use new/more economical tariff/tax classifications • Outsource
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Factors for negotiating terms of payment (5)
• Amount of payment and need for protection • Terms offered by competitors • Industry practices • Capacity for financing intl transactions • Relative strength of the parties involved
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Adjust pricing techniques based on currency rate (3):
• Pass-through • Absorption (price absorbed into the product margin) • Pricing-to-market (destination-specific; responsive to ERs)
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Dumping (defined & 2 types)
selling goods overseas at a price lower than in the exporter's home market or below the production cost or both (Predatory & unintentional dumping)
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Predatory dumping
• Intentionally selling at a loss; increase market share
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Unintentional dumping
• Result of time lags between the dates of sales transaction, shipment & arrival
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Pricing within individual markets (5)
• Corporate objectives • Costs • Customer behavior & market conditions • Market structure • Environmental constraints
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3 philosophies: transfer pricing
cost-based, market-based & arm’s length price
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Transfer pricing challenges (2)
Influencing factors vary in markets (taxation & concerns of motivation of those affected by pricing policies)
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Conditions that support countertrade (4)
Lack of money, acceptability of its value or as an exchange medium, greater ease of transaction by using goods
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Countertrade beneficial coz’ of (3):
World debt crisis and exchange rate volatility; circumvents price & exchange controls
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Other cards in this set

Card 2

Front

Price changes occur when (3)

Back

• New product launch • Market conditions Δ • Internal situation Δ

Card 3

Front

In multiple-product pricing, items are priced indicating: (3)

Back

Preview of the front of card 3

Card 4

Front

Why is pricing getting scary?

Back

Preview of the front of card 4

Card 5

Front

Pricing Research: Customers are currently impacted as follows: (3)

Back

Preview of the front of card 5
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