Pricing Factors Cost 4380 5988 5098 1000 2000 3000 4000 5000 6000 7000 Huawei

Pricing factors cost 4380 5988 5098 1000 2000 3000

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Pricing Factors: Cost 4380 5988 5098 0 1000 2000 3000 4000 5000 6000 7000 Huawei Mate 10 Apple iPhone 8 Samsung Galaxy S8 Price (HKD)
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Pricing Factors: Company Objective Focus Examples of Specific Objectives Profit Focus Maximize long-term profits Maximize short-term profits Demand Focus Create interest and build traffic Signal the image/quality of the product Desensitize consumers to price Market/ Competition Focus Increase market share Stabilize market Discourage new entrants Source: Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009
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Pricing Factors: Company Objective
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Pricing Factors: Competition Characteristics Key Points Number of firms in the industry Firms with no competition can set any price (subject to law) Many active firms fierce competition limits pricing discretion With few firms (especially undifferentiated industries), pricing usually set by industry leader Relative firm size Firms with large market share (typically with lowest cost) can initiate price changes without worrying about competitors Product differentiation Product differentiation allows small firms with many competitors to set prices, but often need heavy promotions Pricing differences limited within a certain range Ease of entry Low-barrier industries, existing firms have less discretion High-barrier industries, existing firms have greater control Source: Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009
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What are the pros and cons of competing on price? + Allow quick reactions to competition + Give flexibility in adjusting demand (for price elastic products) + Often effective in increasing sales (for price elastic products) - Reduce profit and hard to sustain unless you have a low-cost advantage - Ignores product differentiation and train customers to be price sensitive - May signal you were over-priced - Does not build brand loyalty ( ) Pricing Factors: Competition
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Value to customers sets the ceiling price Different customers derive/perceive different values Affected by the number and quality of available alternatives How to determine value?
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  • Marketing, Pricing, Cengage Learning, Strategic Marketing Asia, pricing factors

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