Chapter 10-11 - Chapter Ten Pricing Understanding and...

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Chapter Ten Pricing: Understanding and Capturing Customer Value Dr. LE THANH LONG
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PoMKT- S6 Dr. Le Thanh Long 2 Content b What Is a Price? b Customer Perceptions of Value b Company and Product Costs b Other Internal and External Considerations Affecting Price Decisions
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PoMKT- S6 Dr. Le Thanh Long 3 Price is the amount of money charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service. Price is the only element in the marketing mix that produces revenue; all other elements represent costs What Is a Price?
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PoMKT- S6 Dr. Le Thanh Long 4 Factors to Consider When Setting Prices b Understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value Customer Perceptions of Value
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PoMKT- S6 Dr. Le Thanh Long 5 Factors to Consider When Setting Prices Customer Perceptions of Value
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PoMKT- S6 Dr. Le Thanh Long 6 Factors to Consider When Setting Prices Value-based pricing uses the buyers’ perceptions of value, not the sellers cost, as the key to pricing. Price is considered before the marketing program is set. b Value-based pricing is customer driven b Cost-based pricing is product driven Customer Perceptions of Value
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PoMKT- S6 Dr. Le Thanh Long 7 Factors to Consider When Setting Prices Good-value pricing offers the right combination of quality and good service to fair price Existing brands are being redesigned to offer more quality for a given price or the same quality for less price Customer Perceptions of Value
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PoMKT- S6 Dr. Le Thanh Long 8 Factors to Consider When Setting Prices Value-added pricing attaches value-added features and services to differentiate offers, support higher prices, and build pricing power Pricing power is the ability to escape price competition and to justify higher prices and margins without losing market share Customer Perceptions of Value
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PoMKT- S6 Dr. Le Thanh Long 9 Factors to Consider When Setting Prices Cost-based pricing involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for its effort and risk Company and Product Costs
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PoMKT- S6 Dr. Le Thanh Long 10 Factors to Consider When Setting Prices Cost-based pricing adds a standard markup to the cost of the product Company and Product Costs
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PoMKT- S6 Dr. Le Thanh Long 11 Factors to Consider When Setting Prices Company and Product Costs Types of costs
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PoMKT- S6 Dr. Le Thanh Long 12 Factors to Consider When Setting Prices Fixed costs are the costs that do not vary with production or sales level b Rent b Heat b Interest b Executive salaries Company and Product Costs
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PoMKT- S6 Dr. Le Thanh Long 13 Factors to Consider When Setting Prices Variable costs are the costs that vary with the level of production b Packaging b Raw materials Company and Product Costs
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PoMKT- S6 Dr. Le Thanh Long 14 Factors to Consider When Setting Prices
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This note was uploaded on 04/09/2011 for the course MARKETING 2011 taught by Professor Huyduong during the Spring '11 term at International University in Germany.

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Chapter 10-11 - Chapter Ten Pricing Understanding and...

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