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Unformatted text preview: 3-33-5Chapter 17Price what a customer must give up to get the benefits offered by the rest of a firms marketing mix (plays a role in helping a customer determine value in a product)Pricing levels- affects number of sales a firm makes and how much it earnsStrategy Planning and Pricing Objectives and Policies (Exhibit 17-1)Price Has Many Strategic DimensionsKey Pricing PoliciesPrice FlexibilityPrice Levels Over Product Life CycleDiscounts & Allowances to whom and whenTransportation costs who pays and howArticle: Apple Cuts iPhone Price Ahead of HolidaysUnexpectedly cut the price of its phone claiming that it was seeking to broaden the market for holiday seasoniPhone by $200 to $399plans to release new line of iPhonesprice cuts were planned a long time ago (strategy)Article: Airlines Increase Prices to Compensate for Rising Costsfor extra bags, overweight bags, and oversized bagsdoing this to look for ways to boost profitabilityodue to increased fuel pricesounited expected to generate $100mn in cost savings revenue after raising costs of checking a second and third bag; savings come from burning less fuel because of reduced with in cargo holdStrategy Planning for Price (17-1)4 Variables of ?????1.How flexible the price will be2.At what level the product will be over the product life cycle3.to whom and when discount allowances will be given4.buy their fuel years in advance1990 Sears went back to value-based pricing (Come See the Softer Side of Sears)Changing pricing policies and strategies really hurt SearsArticle: More Shoppers Head to Discount StoresAs economy slows, many avoid higher-end retailersTrend became apparent during the holiday season (wal-mart did better than full price stores)Januarys retail sales were the worst since 1970Full price retailers experiencing sales drops 8% per monthStagnant economy, increased gas prices, and mortgage rates caused individuals and families to pay attention to spendingShopper categories1.those who want to bargain2.those who need to bargainVideo: gym equipment - Cybexgoes into hotel/motelsThinking inside the boxoFocused on this as a companyWant to be a premium supplierEquipment is expensiveLook for profitability on the product (also marketing costs)How do you absorb warranty costs?? Whats the cost to package and ship? All costs can vary (not necessarily fixed costs)Run the risk of dealers going to other productsThe Price Equation: Price Equals Something of Value (Exhibit 17-2) SEE BOOKPriceEqualsoEqualsSomething of ValuePrice as Seen by Channel Members (17-3) SEE BOOK3-73/7/08One price policy-the same for everyone-frequently purchased items-convenient-low cost-maintains goodwillFlexible price policy-different customers, different prices-databases make it easier-sales people can adjust prices-too much cutting can hurt profitsSkimming price-initial skimming: firm tries to sell at a high price before aiming at more price sensitive consumers-problem with people who cant afford (medical/life death situations)...
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This note was uploaded on 04/22/2009 for the course MKT 320F taught by Professor Miller during the Spring '08 term at University of Texas at Austin.
- Spring '08