1. Product / Price / Promotion / Place
Marketing...
Product / Price / Promotion / Place

2. Pricing Strategies Quality Low High Economy Pricing Market Penetration
Price
Market
Skimming
Premium
Pricing
High

3. Pricing Strategies: Market Skimming
Applies to new, distinctive products, early in the Product Life Cycle

4. Pricing Strategies: Market Skimming
Common when there is little competition
Set the price high and reach BEP quickly
Sometimes used to limit demand if you cannot produce enough to meet heavy demand
Initial high price attracts wealthy trendsetters
Most new consumer electronic products practice this pricing technique
The iPod was priced $259 in 2004.
The PS3 was priced
$599 in 2007.

5. Pricing Strategies: Captive Product Pricing
Products that require a “refill” component can command a captive price. Examples are cartridges for razors, water filters and printers…

6. Pricing Strategies: Common Pricing Mistakes…

7. Pricing Strategies: Economy Pricing

8. Pricing Strategies: Premium Pricing

9. Pricing Adjustment Strategies
Types of discounts
Cash discount
Quantity discount
Seasonal discount
Allowances
Trade-in allowances
Promotional allowances
Discount / allowance
Segmented
Psychological
Promotional
Competitive

10. Pricing Adjustment Strategies: Discount / allowance
Quantity discount
Cash discount

11. Pricing Adjustment Strategies: Discount / allowance
Seasonal Discounts
Trade-in allowances

12. Pricing Adjustment Strategies
Types of segmented pricing strategies:
Product-line pricing
Location pricing
Time pricing
Also called revenue or yield management
Certain conditions must exist for segmented pricing to be effective
Discount / allowance
Segmented
Psychological
Promotional
Competitive

13. Pricing a Product-Line
Pricing Adjustment Strategies: Segmented
Pricing a Product-Line

14. Pricing Adjustment Strategies: Segmented

15. Segmented Pricing Strategies: Time Pricing

16. Pricing Adjustment Strategies: Segmented

17. Pricing Adjustment Strategies
The price is used to say something about the product.
Price-quality relationship
Reference prices
Differences as small as five cents can be important
Numeric digits may have symbolic and visual qualities that psychologically influence the buyer
Discount / allowance
Segmented
Psychological
Promotional
Competitive

18. Psychological Pricing
Psychological pricing occurs when sellers consider the psychological factors of price. The price tag on a pair of moccasin UGG slippers is $100. The price on a pair that looks almost identical, sold at L.L. Bean is half that at $ The difference in price is not due to a drastic difference in quality, both are made from sheepskin and both have indoor/outdoor soles, the difference in price is an example of psychological pricing.
The UGG Slipper: $100
Psychological Pricing
The L.L. Bean Slipper: $49.95

19. Pricing Adjustment Strategies: Psychological

20. Pricing Adjustment Strategies: Psychological

21. Pricing Adjustment Strategies
Temporarily pricing products below the list price or even below cost
Contracts, Special-event pricing
Cash rebates
Low-interest financing, warranties
Loss leaders
Discount / allowance
Segmented
Psychological
Promotional
Competitive

22. Pricing Adjustment Strategies: Promotional

23. Pricing Adjustment Strategies: Promotional

24. Pricing Adjustment Strategies: Promotional
Loss Leader
Good or service advertised and sold at below cost price. Its purpose is to bring customers in the store (usually a supermarket) on the assumption that, once inside the store, customers will be stimulated to buy full priced items as well.

25. Easily copied by competitors Creates deal-prone consumers
Pricing Adjustment Strategies: Promotional
Challenges:
Easily copied by competitors
Creates deal-prone consumers
Erode brand value
Industry Price Wars

26. Pricing Adjustment Strategies
most popular strategy
products in a specific category match/follow competitors closely
companies compete using something other than price: ads, promos, distribution, product features
manufacturer with largest market share, first product, or longest on market sets benchmark price
others compare their product, set their price in relation (remember costs vs benefits = value)
Discount / allowance
Segmented
Psychological
Promotional
Competitive

27. Pricing Adjustment Strategies
Competitive Pricing
- some retailers have a strict competitive price policy and will meet or beat others’ prices
- some stores hire competitive shoppers who research the competition to ensure best price

28. Pricing Adjustment Strategies: Competitive
No Loss Leader => Every Day Low (or Competitive) Pricing

29. Pie Chart humour…