Chapter 9:
Pricing Objectives and Policies
Pricing
?Chapter objective ?What is price?
?Strategic dimensions
?Legal issues affecting pricing policies Chapter objectives
?Understand how pricing objectives should guide strategic planning
?Understand choices the marketing manager must make about price flexibility and price levels over the product life cycle
?Understand the many possible variations of a price structure ?Understand some of the legal issues affecting pricing
Price
?Price : The amount of money that is charged for something of value. ?Prices are how much someone is willing to pay. ?Price is called differently ? university: tuition ? landlord: rent ? banks: interest
? transportation: fares ? highway: toll
? doctor ,lawyer: fee ? employee: wage ? motels: room rate
Profit-oriented objectives
Profit Oriented Target Return Maximize Profits Dollar or Unit Sales Growth Growth in Market Share Meeting Competition Nonprice Competition Pricing Objectives Sales Oriented Status Quo Oriented ?Target return sets a specific level of profit as an objective.
?Profit maximization: to get as much profit as possible.
Sales-oriented objectives
?Sales-oriented objective: to get some level of unit sales, dollar sales, or share of market,
without referring to profit.
?Sales growth – for companies pioneering innovative products or technologies to develop markets.
?Growth in market share – to enjoy better economies of scale (more profits, lower costs).
Status quo objectives
?Status quo: “Don’t rock the pricing boat.”
?To stabilize prices, or meet competition, or even avoid competition.
?Nonprice competition: aggressive action on one or more of the Ps other than price.
Price Flexibility Policies
? One-price policy – used in mass selling
? The same price to all customers who purchase products under essentially the same conditions and quantities
? Flexible pricing (e.g., in channels, business markets, expensive consumer shopping products) – used in personal selling
? Offering the same product and quantities to different customers at different prices.
Price level policies
Influencing factors Skimming price policy
Penetration pricing policy
Introductory price dealing: temporary price cuts to speed new products into a market. Basic list prices: are the prices final customers or users are normally asked to pay for products.
Value pricing – setting a fair price level for a marketing mix that really gives the target market superior customer value.
Factors influencing price levels
?Demand ?Costs
?Competition
Skimming Pricing
Skimming Pricing Price Initial skimming price Sell at high price before reducing to next price level and repeat Second price Final price Quantity “Skim the cream” pricing involves selling at a high price to those who are willing to pay before aiming at more price-sensitive consumers when demand is quite inelastic. Penetration Pricing
Penetration pricing involves selling the whole market at one low price when the demand curve is fairly elastic.
Penetration Pricing Whole market price Price level over PLC
?Introduction – skimming or penetrating ?Growth – lower the price
?Maturity – meeting competition, i.e. pricing at the market. ?Decline – lower the price further
Discount
?Discount: are reductions from list price given by a seller to buyers, who either give up
some marketing function or provide the function themselves. ?Quantity discounts - to buy larger quantities. ?Cumulative quantity discounts ?Noncumulative quantity discounts ?Seasonal discounts – to buy earlier. ?Payment terms and cash discounts ?Trade discounts - to channel members.
市场营销学Chapter 9Pricing Objectives and Policies
