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Considerations in the pricing of niche premium products
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Pricing Concept & CVP
• Price discrimination
• “Ultimate Driving Machine” “Joy is BMW”
• For customers looking for a superior driving experience, BMW provides the performance of a sports car while not compromising luxury.
Utilization of Pricing Strategy
Prices Across Product Offerings
• Free Maintenance
10 models and 60 variations across models
Lexus – 11 models 28 variations
Mercedes – 13 models 40 variations
1 Series – has no competitors in luxury market
Utilization of Pricing Concept
Effectiveness to raise BMW’s Profits
Strategically pricing lower than competitors help to gain sales volume in the market.
Due to experience curve, lower unit margin leads to lower unit cost
BMW is also effectively doing price segmentation based on the different underlying characteristics of different customer segments.