Third Edition Roger A. Kerin Lau Geok Theng Steven W. Hartley William Rudelius Copyright © 2015 by McGraw-Hill Education. All rights reserved.

Copyright © 2015 by McGraw-Hill Education. All Rights Reserved.

LEARNING OBJECTIVES After reading Chapter 14, you should be able to: LO 14-1 Describe how to establish the “approximate price level” using demand-oriented, cost-oriented, profit-oriented, and competition-oriented approaches. LO 14-2 Recognize the major factors considered in deriving a final list or quoted price from the approximate price level. 14-2 Arriving at the Final Price

LEARNING OBJECTIVES After reading Chapter 14, you should be able to: Identify the adjustments made to the approximate price level on the basis of discounts, allowances, and geography. LO 14-3 Name the principal laws and regulations affecting specific pricing practices. LO 16-4 14-3 Arriving at the Final Price

The Car Priced at One Lakh The TATA NANO The Car Priced at One Lakh 14-4 Opening Story – TATA NANO

The six steps in setting price The six steps in setting price. The first three steps were covered in Chapter 13 and the last three steps in Chapter 14. LO 14-1 14-5 Elements Making Up a Price – Recap of Chapter 13

Four approaches for selecting an approximate price level LO 14-1 14-6 Establishing an ‘Appropriate Price Level’

Selecting an Appropriate Price Level Demand-Oriented Pricing Approaches Skimming pricing Penetration pricing Prestige pricing Price lining LO 14-1 14-7 Establishing an ‘Appropriate Price Level’

Demand curves for two demand-oriented pricing approaches LO 14-1 14-8 Establishing an ‘Appropriate Price Level’

Energizer’s Lesson in Price Perception Marketing Matters Energizer’s Lesson in Price Perception LO 14-1 14-9 Establishing an ‘Appropriate Price Level’

Selecting an Appropriate Price Level Demand-Oriented Pricing Approaches Odd-even pricing Target pricing Bundle pricing Yield management pricing LO 14-1 14-10 Establishing an ‘Appropriate Price Level’

Selecting an Appropriate Price Level Cost-Oriented Pricing Approaches Standard markup pricing Cost Selling price Cost-plus pricing Cost-plus percentage-of-cost pricing Cost-plus fixed-fee pricing Experience curve pricing LO 14-1 14-11 Establishing an ‘Appropriate Price Level’

Selecting an Appropriate Price Level Profit-Oriented Pricing Approaches Target profit pricing Target return-on-sales pricing Target return-on-investment pricing LO 14-1 14-12 Establishing an ‘Appropriate Price Level’

Results of a computer spreadsheet simulation to select a price to achieve a target return on investment LO 14-1 14-13 Establishing an ‘Appropriate Price Level’

Selecting an Appropriate Price Level Competition-Oriented Pricing Approaches Customary pricing Above-, at-, or below-market pricing Loss-leader pricing LO 14-1 14-14 Establishing an ‘Appropriate Price Level’

Using Marketing Dashboards Are Red-Bull Prices Above/At/Below the Market? LO 14-1 14-15 Establishing an ‘Appropriate Price Level’

Choosing a Price Policy Setting the List Price Choosing a Price Policy One-price policy Dynamic pricing Clickstream LO 14-2 14-16 Set the Listed or Quoted Price

3C Effects on Pricing: Company, Customer, Competitor Setting the List Price 3C Effects on Pricing: Company, Customer, Competitor Company effects Product-line pricing Customer effects Competitive effects Price war LO 14-2 14-17 Major Factors Effect on Pricing

The power of marginal analysis in real world decisions LO 14-2 14-18 Major Factors Effect on Pricing

Three special adjustments to list or quoted price LO 14-3 14-19 Other Factors Affecting Final Price Level

Making Special Adjustments to List Price Discounts Discounts Quantity discounts Noncumulative quantity discounts Cumulative quantity discounts Seasonal discounts LO 14-3 14-20 Other Factors Affecting Final Price Level

Making Special Adjustments to List Price Discounts Trade (functional) discounts Cash discounts LO 14-3 14-21 Other Factors Affecting Final Price Level

The structure of trade discounts LO 14-3 14-22 Other Factors Affecting Final Price Level

Making Special Adjustments to List Price Allowances Allowances Trade-in allowances Promotional allowances Everyday low pricing (EDLP) LO 14-3 14-23 Other Factors Affecting Final Price Level

Marketing Matters Everyday Low Pricing LO 14-3 14-24 Other Factors Affecting Final Price Level

Making Special Adjustments to List Price Geographical Adjustments FOB origin pricing Single-zone pricing Multiple-zone pricing FOB with freight-allowed pricing Basing-point pricing LO 14-3 14-25 Other Factors Affecting the Price Level

Several pricing practices are affected by legal and regulatory restrictions, which benefit both consumers and firms LO 14-4 14-26 Laws & Regulations Affecting Pricing Practices

Making Special Adjustments to the List Price Legal & Regulatory Aspects Price fixing Horizontal price fixing Vertical price fixing Resale price maintenance Rule of reason LO 14-4 14-27 Laws & Regulations Affecting Pricing Practices

Making Special Adjustments to the List Price Legal & Regulatory Aspects Price discrimination Deceptive pricing Geographical pricing Predatory pricing LO 14-4 14-28 Laws & Regulations Affecting Pricing Practices

Five most common deceptive pricing practices LO 14-4 14-29 Laws & Regulations Affecting Pricing Practices