BPTO Model The Model relates price to competing brands in the market by asking existing consumers what brand they will buy among several choices in a simulated shop display.

Exhibit 6-13: Price choices Product Price 1 A P2. 00 B P2. 50 C P2 Exhibit 6-13: Price choices Product Price 1 A P2.00 B P2.50 C P2.75 Exhibit 6-14: New Price choices Product Price 1 Price 2 A P2.00 P2.00 B P2.50 P2.75 C P2.75 P2.75

PRICING CRITERIA Exhibit 6-15: Pricing criteria based on company’s objectives Objectives When to charge When to charge Lower Price Higher price Sales Volume Turnover Fast Slow Market Dominance Low High Profit Objective Long-term Short-term

Exhibit 6-16: Pricing criteria based on product specifications Product Specifications When to charge When to charge Lower Price Higher Price Product type Commodity Patented Product Usage Single Use Multiple Use Product Obsolescence Slow Fast Product Appeal Price Sensitive Price Insensitive Product Method Mass Production Custom Made Production Quantity Big Small Production Capacity Excess Limited Types of service Regular Extra Perceived Value Overpriced Underpriced

PRICE ADJUSTMENT When to Increase Price Inflation

Foreign Exchange

Shortages US$750 US$1,080

Product Repositioning OLD NEW

When to Cut Price Lower Cost Falling Market Shares Excess Capacity Excess Inventory Socialized Pricing (Price Discrimination)

New Market Segment Availability of New Substitutes

Subsequent Sales Competitive Trends

Phase-out Products Damage Products When to Sell Below Cost Perishable Goods Phase-out Products Damage Products