FIGURE 14-2FIGURE 14-2Four approaches for selecting an approximate price level
14-2
STEP 4: SELECT AN
APPROXIMATE PRICE LEVEL
DEMAND-ORIENTED PRICING APPROACHES
Skimming
Pricing
Penetration
Pricing
Prestige
Pricing
Price
Lining
14-3
Skimming Pricing
Skimming pricing
is used when
introducing a new or innovative
product, and involves setting the
highest initial price that customers
really desiring the product are
willing to pay.
14-4
Penetration Pricing
Penetration pricing
involves
setting a low initial price on a
new product to appeal
immediately to the mass market.
14-5
FIGURE 14-3
FIGURE 14-3
Demand curves for two
demand-oriented pricing approaches
14-6
STEP 4: SELECT AN
APPROXIMATE PRICE LEVEL
DEMAND-ORIENTED PRICING APPROACHES
Bundle Pricing
Yield Management Pricing
Odd-Even Pricing
Target Pricing
14-7
Odd-Even Pricing
Odd-even pricing
involves setting
prices a few dollars or cents under
an even number.
Gillette fusion $11.99
14-8
14-9
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to-india-analyst.html
Bundle Pricing
Bundle pricing
involves the
marketing of two or more products
in a single package price.
14-10
14-11
14-12
-
cheaper price, if all
items are combined
-
More value
-
Saving time
-
More items sold
-
Increase turnover
-
More sales/revenue
-
Faster ordering
process.
-
Retain customers
-
Higher profit margin
Yield Management Pricing
Yield management pricing
involves the charging of different
prices to maximize revenue for
a set amount of capacity at any
given time.
Commonly used by airlines
14-13
STEP 4: SELECT AN
APPROXIMATE PRICE LEVEL
COST-ORIENTED PRICING APPROACHES
Standard Markup Pricing
Cost-Plus Pricing
Experience Curve Pricing
•
Cost-Plus
Percentage-
of-Cost
Pricing
•
Cost-Plus
Fixed-Fee
Pricing
14-14
