1. www.mhhe.com/fourps For use only with Perreault/Cannon/McCarthy or Perreault/McCarthy texts. © 2008 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Pricing Objectives and Policies CHAPTER SIXTEEN

2. CH 17: Price Setting in the Business World CH 16: Pricing Objectives and Policies Pricing objectives Pricing policies Pricing and customer value Legal issues and pricing policies Strategy Planning and Pricing Objectives and Policies (Exhibit 16-1)

3. Discounts & Allowances – To Whom & When Discounts & Allowances – To Whom & When Discounts & Allowances – To Whom & When Discounts & Allowances – To Whom & When Price Levels Over Product Life Cycle Price Levels Over Product Life Cycle Price Levels Over Product Life Cycle Price Levels Over Product Life Cycle Price Flexibility Key Pricing Policies Key Pricing Policies Transportation Costs – Who Pays & How Transportation Costs – Who Pays & How Price Has Many Strategy Dimensions

4. The Price Equation: Price Equals Something of Value (Exhibit 16-2)

5. Price as Seen by Channel Members (Exhibit 16-3)

6. Objectives Should Guide Strategy Planning for Price (Exhibit 16-4)

7. OR One-Price Policy The same for everyone Frequently purchased items Convenient Low cost Maintains goodwill Flexible-Price Policy Different customers, different prices Databases make it easier Salespeople can adjust prices Too much cutting can hurt profits Most Firms Set Specific Pricing Policies to Reach Objectives

8. Skimming vs. Penetration (Exhibit 16-5)

9. Seasonal Cash Trade Seasonal Quantity From List Price From List Price Sale Discount Policies: Reductions from List Prices

10. Push Money Stocking Advertising Push Money Stocking Advertising Common Types of Allowances Trade-Ins Allowance Policies – Off List Prices

11. Uniform Delivered Uniform Delivered Zone F.O.B. Uniform Delivered Uniform Delivered Zone F.O.B. Common Geographic Policies Freight Absorption Freight Absorption List Price May Depend on Geographic Pricing Policies

12. Phony List Prices Phony List Prices Phony List Prices Phony List Prices Dumping Unfair Trade Practice Acts Unfair Trade Practice Acts Unfair Trade Practice Acts Unfair Trade Practice Acts Key Issues Price Fixing Legality of Pricing Policies

13. Meeting Competition Meeting Competition Meeting Competition Meeting Competition Cost Differences Cost Differences Cost Differences Cost Differences “Like Grade & Quality” “Like Grade & Quality” “Like Grade & Quality” “Like Grade & Quality” Robinson- Patman Act Robinson- Patman Act Robinson- Patman Act Robinson- Patman Act Key Issues “Proportionately Equal” Basis “Proportionately Equal” Basis Price Discrimination