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Chapter 14: Developing Price Strategies and Programs
Francis L. EstolanoMay 10, 2013
How Much Are You?
Outline:
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•6 Steps in Setting Price•Price Adaptation Strategies
6 Steps in Setting Price
Select the Price Objective
Determine Demand
Estimate Costs
Analyze competitor prize
Select Pricing method
Select final price
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1st Step: Selecting the Price Objective
•Survival•Maximum current profit•Maximum market share•Maximum market skimming•Product-quality leadership
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2nd Step: Determining Demand
•Price Sensitivity•Estimating Demand Curves•Price Elasticity of Demand
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3rd Step: Estimating Costs
•Types of Costs•Accumulated Production•Activity-based Cost Accounting•Target Costing
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4rd Step: Analyze Competitor Price Mix
•Identify industry price•Compare with costs of product•Change pricing strategy•Stay ahead with trends in pricing strategy through competitor
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5th Step: Selecting Pricing Method
•Mark up Pricing•Target-Return Pricing•Perceived-Value Pricing•Value Pricing•Going-rate Pricing•Auction Type Pricing
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6th Step: Selecting the Final Price
•Impact of other marketing activities•Company pricing policies•Gain and risk sharing pricing•Impact of price on other parties
6 Steps in Setting Price
Select the Price Objective
Determine Demand
Estimate Costs
Analyze competitor prize
Select Pricing method
Select final price
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VS
4 Price-Adaptation Strategies
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1.Geographical Pricing2.Price Discounts and Allowances3.Promotional Pricing4.Differentiated Pricing
Geographical Pricing
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The practice of modifying a basic list of price based on geographical location
Price Discounts and Allowances
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Prices of goods or services are being reduced.
Promotional Pricing
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• Loss-leader Pricing• Special Event Pricing• Cash Rebates• Low-Interest Financing• Longer Payment Terms• Warranties and Service Contracts• Psychological Discounting
Differentiated Pricing
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• Customer Segment Pricing• Product form Pricing• Image Pricing• Channel Pricing• Location Pricing• Time Pricing• Yield Pricing
REMEMBER THIS….
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4$
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Chapter 14: Developing Price Strategies and Programs
Francis L. EstolanoMay 10, 2013
How Much Are You?