Copyright 2010 Delmar, a part of Cengage Learning. All Rights Reserved. H O S P I T A L I T Y & T R A V E L M A R K E T I N G & T R A V E L M A R K E T I N G Chapter 19 Pricing

Copyright 2010 Delmar, a part of Cengage Learning. All Rights Reserved. H O S P I T A L I T Y & T R A V E L M A R K E T I N G & T R A V E L M A R K E T I N G The Dual Role of Pricing Pricing plays a dual role in business: As a direct determinant of profitability As an implicit promotional-mix element

Copyright 2010 Delmar, a part of Cengage Learning. All Rights Reserved. H O S P I T A L I T Y & T R A V E L M A R K E T I N G & T R A V E L M A R K E T I N G Unsophisticated Approaches to Pricing a. Competitive approach b. Follow-the-leader approach c. Intuitive approach d. Traditional or rule-of-thumb approach

Copyright 2010 Delmar, a part of Cengage Learning. All Rights Reserved. H O S P I T A L I T Y & T R A V E L M A R K E T I N G & T R A V E L M A R K E T I N G Sophisticated Approaches to Pricing a. Target pricing b. Price discounting and discrimination c. Promotional pricing d. Cost-plus pricing

Copyright 2010 Delmar, a part of Cengage Learning. All Rights Reserved. H O S P I T A L I T Y & T R A V E L M A R K E T I N G & T R A V E L M A R K E T I N G e. New-product pricing f. Price lining g. Psychological and odd pricing h. Leader pricing i. Multistage approach Sophisticated Approaches to Pricing (continued)

Copyright 2010 Delmar, a part of Cengage Learning. All Rights Reserved. H O S P I T A L I T Y & T R A V E L M A R K E T I N G & T R A V E L M A R K E T I N G Figure 19.8 Break-even chart.

Copyright 2010 Delmar, a part of Cengage Learning. All Rights Reserved. H O S P I T A L I T Y & T R A V E L M A R K E T I N G & T R A V E L M A R K E T I N G Break-Even Analysis Break-even analysis involves developing charts that show the relationship of costs, customer demand volumes, and profits Costs are separated into fixed and variable in order to do break-even analysis

Copyright 2010 Delmar, a part of Cengage Learning. All Rights Reserved. H O S P I T A L I T Y & T R A V E L M A R K E T I N G & T R A V E L M A R K E T I N G Multistage Approach to Pricing Begins by considering the company’s objectives and specific pricing objectives Eight other factors are then evaluated before arriving at the price Together, the factors reviewed are known as the nine Cs of pricing

Copyright 2010 Delmar, a part of Cengage Learning. All Rights Reserved. H O S P I T A L I T Y & T R A V E L M A R K E T I N G & T R A V E L M A R K E T I N G Nine Cs of Pricing 1. Customer characteristics 2. Corporate objectives 3. Corporate image and positioning 4. Customer demand volumes

Copyright 2010 Delmar, a part of Cengage Learning. All Rights Reserved. H O S P I T A L I T Y & T R A V E L M A R K E T I N G & T R A V E L M A R K E T I N G 5. Costs 6. Competition 7. Channels 8. Complementary facilities and services 9. Consistency with marketing-mix elements and strategy Nine Cs of Pricing (continued)