f10+MKTG+3104+Student+13,+14.+Pricing+ppt

f10+MKTG+3104+Student+13,+14.+Pricing+ppt - MKTG 3104...

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MKTG 3104 Pricing Strategy
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CONTENT OBJECTIVES 1. Model price and its relationship to value 2. Understand 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. Consider the psychology of pricing and the role of reference prices
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PRICE Money or other considerations exchanged for the ownership or use of a good or service. Barter in 2009: $12 billion 400,000 companies ( International Reciprocal Trade Association)
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+ - Captures value for the seller via profits Create value for the buyer Marketing Model of Price and Value TOTAL OFFER VALUE = Perceived benefits Price Higher prices may also create benefits and value if: Buyers infer quality from price High price adds status or psychological benefits + Benefits Value Price Product Promotion Place Reference price
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Steps in Setting Price (Chapter 14)
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Steps in Setting Price (Chapter 14)
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Step 1. Set Pricing Objectives 1. Price for Profit Does this mean long term profit or current profit? Short term profit or target return objective need to know cost/demand curves to decide price Long term horizon sacrifice short-term profits for better growth, market share, or competitive advantage, which often implies lower price
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2. Price to Increase Sales or Market Share Easily communicated targets Dollar sales important for leverage with distribution channels Unit sales important if you expect an experience curve effect Step 1. Set Pricing Objectives
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Experience Curve Effect As cumulative volume doubles, unit cost decreases by a fixed percentage Why? Learning curve for production, marketing Process innovation Product redesign Implication? Sell more units to lower costs lower prices Limitations: Doesn’t always exist Cost reductions are not automatic Competitors may leapfrog your curve
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each time cumulative volume doubles. Unit
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f10+MKTG+3104+Student+13,+14.+Pricing+ppt - MKTG 3104...

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