1. Pricing Strategy

2. Pricing Objectives Segmentation and Positioning Objectives
Sales and Profit Objectives
Competitive Objectives
Survival Objectives
Social Responsibility Objectives

3. Basic Value Positions Price Level Value Position
High Relative to Product Class
Around Average for Product Class
Low Relative to Product Class
Value Position
High Value Because of Quality and Prestige
High Value Because of Good Quality at a Reasonable Price
High Value Because of Acceptable Quality at a Low Price

4. Customer Value Map Relative Price Market-perceived Quality Ratio
Higher
Worse customer
value
Fair-value line
Relative Price
1.0
Better customer
value
Lower
Inferior
1.0
Superior
Market-perceived Quality Ratio

5. Pricing as Value-Sharing
Upper bound
Customer perceived value
Customer surplus value
Price
Supplier surplus value
Lower bound
Cost

6. The Pricing Process Set Pricing Objectives Evaluate Customer
Response and
Other Pricing
Constraints
Analyze Profit
Potential
Make Price
Adjustments as
Needed
Set Initial Price

7. Major Considerations in Setting Price

8. Cost-Plus Pricing Adding a standard markup to the cost of the product.
Popular because:
Sellers more certain about cost than demand
Simplifies pricing
When all sellers use, prices are similar and competition is minimized
Some feel it is more fair to both buyers and sellers

9. Value-Based Pricing
Uses buyers’ perceptions of value, not the seller’s cost, as the key to pricing.

10. Value-In-Use Analysis
Value-in-use analysis, also termed economic value added (EVA) is a method of estimating the price equivalence of the firm’s product as opposed to a competitive product
It is frequently employed in industrial markets when a new product is being introduced
The task is to identify the maximum price customers should be prepared to pay based on the enhanced customer value offered by the new product

11. Illustration of Value-In-Use Analysis
Negative
differentiation
value
Maximum polyester price excluding extra processing
$2.00
$0.20 Extra processing cost
$1.80
Maximum price customers will pay
$1.50
Total
economic
value
Positive
differentiation
value
$1.00
$0.50
Cotton Price
Reference
value
$ 0.00
Price (per lb.)

12. 王品集團7折定價策略
「物超所值不稀奇，我們還要『超』物超所值！」聽來有點繞口令式的行銷策略，正是董事長戴勝益帶給顧客「平價奢華」體驗的祕訣，也是能在台灣餐飲業逆勢成長的祕密武器。
在「物超所值」4字前，這刻意被冠上的「超」字，究竟有何神奇的魔法，讓王品集團能在小小餐桌上，點「食」成金，還能跨過台灣海峽，大舉開疆拓土？魔法1 ： 7折定價策略，觸動消費欲望
先從價格策略來看，王品集團每成立新品牌，會邀來目標顧客試吃估價，求其平均後再打「7折」，即為上市後的價格。
為什麼是「7折」？戴勝益以打折心理學分析，消費者對「9折」的觀感往往是公關價，只要靠點關係，大多能如願以償；「8折」則是週年慶價，每年總會有這麼一次，不足為奇。若落到「7折」，在消費者心中就會打破市場行情，產生強大吸引力。

13. Competition-Based Pricing
Going-Rate Pricing:
Firm bases its price largely on competitors’ prices, with less attention paid to its own costs or to demand.
Sealed-Bid Pricing:
Firm bases its price on how it thinks competitors will price rather than on its own costs or on demand.

14. New-Product Pricing Strategies
When to use:
Product’s quality and image must support its higher price.
Costs of smaller volume cannot be so high they cancel the advantage of charging more.
Competitors should not be able to enter market easily and undercut the high price.
Market-Skimming
Set a high price for a new product to “skim” revenues layer by layer from the market.
Company makes fewer, but more profitable sales.

15. New-Product Pricing Strategies
When to use:
Market must be highly price sensitive so a low price produces more market growth.
Production and distribution costs must fall as sales volume increases.
Must keep out competition and maintain low price or effects are only temporary.
Market Penetration
Set a low initial price in order to “penetrate” the market quickly and deeply.
Can attract a large number of buyers quickly and win a large market share.

16. Pricing Analysis for A New Item of Capital Equipment
$360,000
Maximum price
Toe hold price
Maximum profit price
$260,000
Competitive equivalence
Price
High market share price
$160,000
Fully loaded manufacturing costs
$100,000
Direct out-of-pocket costs

17. Product Line Pricing
Involves setting price steps between various products in a product line based on:
Cost differences between products
Customer evaluations of different features
Competitors’ prices

18. Optional- and Captive-Product Pricing
Optional-Product
Pricing optional or accessory products sold with the main product (e.g., ice maker with the refrigerator).
Captive-Product
Pricing products that must be used with the main product (e.g., replacement cartridges for Gillette razors).

19. Product Bundle Pricing
CityPASS bundles tickets to many attractions at a low combined price.

20. Psychological Pricing
Considers the psychology of prices and not simply the economics.
Consumers usually perceive higher-priced products as having higher quality.
Consumers use price less when they can judge quality of a product.

21. The Psychology of Consumption
Higher consumption means higher sales
Costs drive consumption
Pricing drives perception of cost

22. Consumption Follows the Timing of Payments
Annual payment plan
Quarterly payment plan
Mean attendance
Semiannual payment plan
Monthly payment plan
Month of membership

23. Promotional Pricing Approaches:
Temporarily pricing products below list price and sometimes even below cost to create buying excitement and urgency.
Low-Interest Financing
Loss Leaders
Approaches:
Special-Event Pricing
Longer Warranties
Cash Rebates
Free Maintenance
Discounts