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Unformatted text preview: October 17, 2006 Chapter 7: Pricing Objectives and Policies PRICE We all have prices. How do you determine it? You set your price. Marketing Strategy Planning Process Strategic Planning and Pricing Objectives Price: what a customer must give up to get benefits from product a firm supplies NP: Pricing Strategy: Give me Cayman or Give me Death New Porsche almost worth high price of admission: 2006 Cayman S latest high performance offering from Porsche Sold 1, 023 in the first 2 weeks of sales Target customer: 88% men, 65% married, avg. age 45 (midlife crisis men) Outstanding reviews in its class Price: starts at $59,695 Strategy- Midway between popular Boxster S (55K) and 911 Carrerra (72K) Plan: capture segment between these two prices Aimed at midlife crisis men. Price has many strategic dimensions: Key pricing policies: price flexibility- American Airlines is very flexible. Have never been unprofitable. Recently raised prices because of price of gasoline and competition. Charge a lot ($10) for checking bags. $15 Paying for reserved seat., price levels over product life cycle, discounts and allowances to whom and when Transportation costs- who pays and how Price affects number of sales and how much a firm owns Airline prices- very time sensitive Cant get people off planes now Pricing strategy: Apple Cuts iPhone price Ahead of Holidays Stocks fall amid speculation that sales have stalled: Sept 5- Apple unexpectedly cut the price of its iPhone claming that it was seeking to broaden the market for the holiday season. Apple which hardly ever drops prices on its products cut by 200 bucks Apple also sites that the price cut was planned a long time ago to keep the products pricing in line with the new iPod Touch which looks just like the iPhone but lacks the phone feature Apple has planned the release of a new line of iPods in time for the holiday season: iPod touch, the new Nano, and iPod classic KEY POINT: apple is trying to price its product to gain an advantage over the competition going into the high volume holiday season Apple is taking a more aggressive selling strategy going into the holiday season and targeting another target market segment that is more price sensitive Strategic Planning for Price Target Market Product Place Promotion Price Price objectives (stated above) Discounts and allowances- Northwest airlines- Fly away for less. E-certificate. Promotion- price incentive Southwest Airlines- buys fuel 3-5 years in advance keep prices low. This is how you stay competitive Price has value. Taco Bell Video. Quality food at low price. 59, 79, 99 cent 3-tier people started to copy QSR industry. Based off of everyday low prices....
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This note was uploaded on 04/27/2008 for the course MKT 3210F taught by Professor Miller during the Spring '08 term at University of Texas at Austin.
- Spring '08