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S12+MKTG+3104++13,+14.+Pricing+Strategy+Outline+ppt

S12+MKTG+3104++13,+14.+Pricing+Strategy+Outline+ppt - MKTG...

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MKTG 3104 Pricing Strategy
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CONTENT OBJECTIVES 1. Model price and its relationship to value 2. Identify the steps in price setting and the related issues and analysis Pricing objectives and constraints Demand and revenue curves Cost, volume, price, profit relationships Pricing strategies 3. Grasp the psychology of pricing and the role of reference prices PRICE Money or other considerations exchanged for the ownership or use of a good or service.
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+ - Captures value for the seller via profits Create value for the buyer Marketing Model of Price and Value PERCIEVED OFFER VALUE = Perceived benefits Price VALUE Higher prices may also create benefits and value if: Buyers perceive a _______________ relationship (price _______ quality) High price adds _____________________benefits As the buyer’s _____________increases, so does the perceived value of the offer. +
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Steps in Setting Price (Chapter 13)
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Steps in Setting Price (Chapter 14)
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Step 1. Set Pricing Objectives 1. Price for Profit (Example: Target Profit Pricing, Target Return-on-Sales Pricing) Does this mean long term profit or current profit? Short term profit or target return objective need to know cost/demand ______ Long term horizon need to consider the effect of price on market share, growth, and ___________________
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2. Price to Increase Sales or Market Share (Examples: Penetration Pricing Bundle Pricing) Easily communicated targets Dollar sales/share important for obtaining market _____ and leverage with ______________________ Unit sales/share important if you expect an experience curve effect to ________________ Step 1. Set Pricing Objectives
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Experience Curve Effect As cumulative volume doubles, unit cost decreases by a fixed percentage Why? ______________for production, marketing Process _________ Product _________ Implication? Maximize unit sales to lower costs Limitations: Degree and sources of cost reduction vary Cost reductions are not automatic Competitors may _____________your curve
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3. Price for Stability (Example: Price leader/Price Follower) powerful competitors want to avoid price ___________ ______________ initiates a price change that is soon copied by competitors 4. Price for Survival try to cover costs should be temporary 5. Price for Social Responsibility partial cost recovery Step 1. Set Pricing Objectives
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