1. Peter F. Drucker
“Consumers do not see it as their job to ensure manufacturers a PROFIT The only sound way to price is to start out with what the market is willing to pay”
11/16/2018

2. 11/16/2018
The Price of
501
Levi’s

3. PRICING OBJECTIVE
PENETRATION
SKIMMIMG
ROI
STABILITY
11/16/2018

4. …Psychological association perceived value indication of quality
11/16/2018

5. INFLUENCES ON PRICING DECISIONS
PSYCHOLOGICAL
INDUSTRY CONDITIONS
DECISION MAKER
STAGE OF PRODUCT LIFE CYCLE
11/16/2018

6. . . . Pricing history Started at $50
Competition drove to $10 in decline
Enter new market up to $75
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7. 11/16/2018
PRICING PLANS

8. Developing a Pricing Strategy (1)
ASSESS PRICE
COMPETITIVENESS
Identify Quality Dimensions
Weight Quality Dimensions
Measure Competitors
Discover price/quality preferences
(Value Mapping)
11/16/2018

9. Developing a Pricing Strategy (2)
VALUE MAPPING
RELATIVE
PRICE
RELATIVE
QUALITY
11/16/2018

10. Developing a Pricing Strategy (3)
SET PRICING
OBJECTIVES
GROWTH
MAINTAIN
QUALITY
HARVEST
DRIVEN BY
MARKETING &
FINANCE
11/16/2018

11. Developing a Pricing Strategy (4)
STRATEGIC
PRICE FOCUS
Stage of Evolution of the Market
Consumer Price Sensitivity
11/16/2018

12. Developing a Pricing Strategy (5)
TARGET MARKET
SEGMENT
Driven by price spread and profitability
11/16/2018

13. Developing a Pricing Strategy (6)
EVALUATE
COMPETITVE STRATEGIES
Assess likely reaction of competition
11/16/2018

14. Developing a Pricing Strategy (7)
MEASURE VALUE
TO CONSUMER
Trade off values - cosmetics
Increase in productivity, lowering costs, increasing revenues (EVC)
11/16/2018

15. Developing a Pricing Strategy (8)
PRODUCT LINE PRICING
The Product Range
The HP inkjet cartridge
Competitive Block
Options, exclusive models
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16. Developing a Pricing Strategy (9)
SET PRICE
Communicating to the Market
The Sales Force
Channel Control
11/16/2018

17. ..pricing policy killer
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18. PRICING COMPARISONS CZECH 11/16/2018 STORE PRICING
CANNON III 70 X 140 Classic
$5,32
CANNON III 70 X 140 Comm.
$3,57
IKEA 70 X 140
TESCO 70 X 140
KOTVA 70 X 140
$0,00
$2,00
$4,00
$6,00
$8,00
$10,00
$12,00
$14,00
$16,00
$18,00
EXCHANGE 30 K = 1USD
CZECH
STORE PRICING
KOTVA 70 X 140
$16,50
TESCO 70 X 140
$10,30
IKEA 70 X 140
$14,16
CANNON III 70 X 140 Comm.
$3,57
CANNON III 70 X 140 Classic
$5,32
Includes 22% Vat/30%Margin/12% Duty
11/16/2018

19. HOW THEY DO IT
MAKRO
PRICING FOR COMPETITION
11/16/2018

20. Foreign Market Pricing (1)
“Assume Local Market Pricing”
In-market Freight
Distribution Centre
Warehousing
In-Bound Costs
11/16/2018

21. Foreign Market Pricing (2)
Customs, Duty, Tax, Withholding
Port to Port Freight, Insurance, Demurrage
Ex-Factory to Port
Net, Loaded at Factory Door
Special Shipping Packaging
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22. Foreign Market Pricing (3)
Established Market Pricing
New Packaging
Foreign Standards
FX Cover
11/16/2018

23. Foreign Market Pricing (1)
Paternalistic Finance
lower cost funds for pipeline
fixtures, equipment
currency shortages
Politics
11/16/2018

24. …..an example New flat screen and design for computer. . . .
11/16/2018

25. SharpVue Corp Sells 100 screens per week at $1000 Profit of $20,000
Marketing wants to drop price 10% to stimulate sales
How many units must be sold to hit breakeven?
11/16/2018

26. Discount Trap Gross Profit Is: Price 5% 10% 20%
Dsct Sales Increase Needed 1%
5% inf
10% inf inf 100
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