2. 8/15/2015 New Product Development Pricing

3. 8/15/2015 The Six Discussion Questions + 1. What is incremental pricing and how does one go about using it? 2. What is the release price and how would one go about calculating it? (Include 6-8 components including ceiling and floor price). 3. What is the difference between the release price and the reference price? (Give alternatives to discounting during launch. Why is this important?) 4. What is the ceiling price and why might it not be used? 5. What is the floor price and how would one go about calculating it? 6. Is it always wise to go for the price that would result in the largest market segment? (Clearly, pricing for the largest market share may not maximize profit. Why? When is penetration pricing a good strategy? Why?)

4. 8/15/2015 What is the two-edged pricing sword? Charge too much and the product _______________________. Charging too little is even more dangerous! 1. Once a product hits the market it is almost ______________________ ___________________________ What is the main point of the paper? 2. 80-90% of release prices are __________________

5. When to start working on product pricing for a new product? ____________________________________ ____________________________________ “Now we have the cold fusion machine what do we charge for it? Well, $99.99 seems good” 8/15/2015

6. Classifying New Products New-to-the-World: Innovative products. New Product Lines Additions to Existing Product Lines: Extensions. Product Improvements: Repositioning: Existing products targeted to a new market. ______________________ ________________

7. Later discuss how these pricing approaches compare to those from the 4 P’s Video? Four P’s Video Layered Luxury Skimming Penetration NP Pricing Incremental Release Reference Ceiling Floor Pricing New Products By: Michael V. Marn, Eric V. Roegner, and Craig C. Zawada Published July 2003 8/15/2015

8. Q#1-What is the incremental pricing approach? Starts with _________________________ _________________________ Adds enough to cover the new offerings ________________ Adjust that amount based on ______________ When does it work Best? For ________________ & _______________________new products Incremental price can show you __________ _______________________ with some small margin of return

9. 8/15/2015 Q#2-How would one calculate the release price? Begin by defining the __________ price. Use _______________________ and/or ______________________analysis. Establish the ___________________ Gauge the market’s _____________ Establish the ________________ price. Determine ________________________. Launch

10. 8/15/2015 Q#3-What is the difference between the release price and reference price? They could be the same if there are no discounts or incentives offered ______________________________________ ______________________________________ “More than any press release, sales pitch, or catalog description, the ________________ __________________tells the market what a company really thinks a new product is worth Release & reference price are ______________ ____________ process NOT a way to come up with a price.

11. 8/15/2015 Q#4-What are the pros and cons of the ceiling price? It ensures that each ________ ______________will be considered. However, there may be: 1. Insufficient ______________, or 2. it may leave ____________ ____________ for competitors.

12. 8/15/2015 Q#5-How would one calculate the price floor? _________________________ pricing works here. Needs an accurate cost _____________________ ___________________________________________ _________________________________________ _________________________________________ Be careful of ______________________________ (for spreading of fixed costs!)

13. 8/15/2015 Why is it not always wise to go for the price that would return the largest market segment? Q#6 Does maximizing volume maximize profit? The trade-off-____________________________ profits A low reference price may trigger ____________ The lower price won’t allow the ______________ _________________________________________ It could _________________ existing products (may be ________________________________

14. How do these pricing approaches compare to those from the 4 P’s Video? Four P’s Video Layered Luxury Skimming Penetration NP Pricing Incremental Release Reference Ceiling Floor Pricing New Products By: Michael V. Marn, Eric V. Roegner, and Craig C. Zawada Published July 2003 8/15/2015

15. Clarify the NP Prices Presented NP Pricing Incremental Release Reference Ceiling Floor Incremental price is _________ ___________________ with some small margin of return Release & reference price are _________________________ ____________ process NOT a way to come up with a price. Ceiling price is the _______ ____________________________ and sell some product (hopefully at a profit) Floor price is the ___________ _____________________ with some small margin of return 8/15/2015

16. Boil down the differences NP Pricing ________________ ____________ Four P’s Video __________________ _______________ __________________ Pricing New Products By: Michael V. Marn, Eric V. Roegner, and Craig C. Zawada Published July 2003 8/15/2015

17. Other Basic Pricing Considerations and Strategies New Product Pricing Competition Based Pricing Other Product Line/Mix Pricing Captive & Optional Pricing Bundling Discount Pricing Psychological Pricing Promotional Pricing 8/15/2015 Penetration, Skim & Luxury Incremental Other _________________________ _________________________ _________________________ _________________________ _________________________

18. 8/15/2015 What are some important pricing considerations during launch? The first six months or year are critical to a new product. Discounting ___________________ the reference price. Alternatives are; 1. ______________________generally, 2. _____________________________ get free samples 3. Free _____________________

19. 8/15/2015 When should penetration pricing work? When high ___________________________________. (lowering price yields more or less revenue?) _______________ When you have a ___________________ 1. through ______________________________________ 2. _________________________

20. HTTP://WWW.SLIDESERVE.COM/AWENTIA/PRICING-PRODUCTS-PRICING-CONSIDERATIONS-AND-STRATEGIES A lesson from Slide Serve 8/15/2015

21. THE END