Nov 2 - Pricing Strategy - price sensitivity Factors...

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Pricing Strategy November 2, 2009 Instructor: Tamar Milne
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Agenda The influence of pricing The 5 C’s of Pricing Company objectives Customers Competition For next class. .. 2
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Name Your Price 3
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The Influence of Pricing Price: total of what a customer exchanges for a product; value The only P that generates revenue Highly visible tool, therefore effective Pricing is an art, not a science Evolve with the environment and consumers In the absence of other information, price is an indicator of quality 4
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Five C’s of Pricing 5 Value Company objectives Customers Competition Costs Channel members
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1. Company Objectives 1. Sales orientation: maximize volume Units, revenue, or market share 2. Profit orientation: maximize profit, return Variation: set a target 3. Competitor orientation: position relative to the competition Focus on non-price elements of marketing mix 4. Customer orientation: maximize perceived value 6
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2. Customer: Elasticity of Demand Elasticity:
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Unformatted text preview: price sensitivity Factors affecting elasticity: Necessity? Or non-essential? Wealth effect (a.k.a. income effect) Availability of substitutes (reduced by brand loyalty) Cross-price elasticity: complementary products Proportion of budget Increasing revenue: A price cut will work with elastic demand A price increase will work with inelastic demand 8 Elastic or Inelastic? 9 2. Customer: Psychological Factors Reference prices Perception of EDLP vs. high/low pricing Odd pricing Familiarity or past experience with: Brands Product attributes Evaluative criteria 10 3. Competition Level of competition often shapes pricing Monopoly Oligopoly Monopolistic competition Pure competition Decommoditize through differentiation 11 For Next Class. .. Readings: Chapter 12: Pricing Concepts and Strategies 12...
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This note was uploaded on 02/14/2010 for the course COMM 296 taught by Professor Dasgupta during the Fall '08 term at The University of British Columbia.

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Nov 2 - Pricing Strategy - price sensitivity Factors...

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