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Product / Price / Promotion / Place Marketing....

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Presentation on theme: "Product / Price / Promotion / Place Marketing...."— Presentation transcript:

1 Product / Price / Promotion / Place Marketing...

2 Pricing Strategies LowHigh Low High Economy Pricing Market Penetration Market Skimming Premium Pricing Price Quality

3 Pricing Strategies: Market Skimming Applies to new, distinctive products, early in the Product Life Cycle

4 – Common when there is little competition – Set the price high and reach BEP quickly – Sometimes used to limit demand if you cannot produce enough to meet heavy demand – Initial high price attracts wealthy trendsetters – Most new consumer electronic products practice this pricing technique The iPod was priced $259 in The PS3 was priced $599 in Pricing Strategies: Market Skimming

5 Pricing Strategies: Captive Product Pricing Products that require a refill component can command a captive price. Examples are cartridges for razors, water filters and printers…

6 Pricing Strategies: Common Pricing Mistakes…

7 Pricing Strategies: Economy Pricing

8 Pricing Strategies: Premium Pricing

9 Pricing Adjustment Strategies Discount / allowance Segmented Psychological Promotional Competitive Types of discounts – Cash discount – Quantity discount – Seasonal discount Allowances – Trade-in allowances – Promotional allowances Strategies

10 Pricing Adjustment Strategies: Discount / allowance Quantity discount Cash discount

11 Seasonal Discounts Trade-in allowances Pricing Adjustment Strategies: Discount / allowance

12 Discount / allowance Segmented Psychological Promotional Competitive Types of segmented pricing strategies: – Product-line pricing – Location pricing – Time pricing Also called revenue or yield management Certain conditions must exist for segmented pricing to be effective Strategies Pricing Adjustment Strategies

13 Pricing a Product-Line Pricing Adjustment Strategies: Segmented


15 Segmented Pricing Strategies: Time Pricing

16 Pricing Adjustment Strategies: Segmented

17 Discount / allowance Segmented Psychological Promotional Competitive The price is used to say something about the product. – Price-quality relationship – Reference prices – Differences as small as five cents can be important – Numeric digits may have symbolic and visual qualities that psychologically influence the buyer Strategies Pricing Adjustment Strategies

18 Psychological Pricing Psychological pricing occurs when sellers consider the psychological factors of price. The price tag on a pair of moccasin UGG slippers is $100. The price on a pair that looks almost identical, sold at L.L. Bean is half that at $ The difference in price is not due to a drastic difference in quality, both are made from sheepskin and both have indoor/outdoor soles, the difference in price is an example of psychological pricing. The UGG Slipper: $100 The L.L. Bean Slipper: $49.95

19 Pricing Adjustment Strategies: Psychological


21 Temporarily pricing products below the list price or even below cost – Contracts, Special-event pricing – Cash rebates – Low-interest financing, warranties – Loss leaders Strategies Discount / allowance Segmented Psychological Promotional Competitive Pricing Adjustment Strategies

22 Pricing Adjustment Strategies: Promotional


24 Loss Leader Good or service advertised and sold at below cost price. Its purpose is to bring customers in the store (usually a supermarket) on the assumption that, once inside the store, customers will be stimulated to buy full priced items as well.

25 Challenges: – Easily copied by competitors – Creates deal-prone consumers – Erode brand value – Industry Price Wars Pricing Adjustment Strategies: Promotional

26 most popular strategy products in a specific category match/follow competitors closely companies compete using something other than price: ads, promos, distribution, product features manufacturer with largest market share, first product, or longest on market sets benchmark price others compare their product, set their price in relation (remember costs vs benefits = value) Strategies Discount / allowance Segmented Psychological Promotional Competitive Pricing Adjustment Strategies

27 Competitive Pricing - some retailers have a strict competitive price policy and will meet or beat others prices - some stores hire competitive shoppers who research the competition to ensure best price Pricing Adjustment Strategies

28 Pricing Adjustment Strategies: Competitive No Loss Leader => Every Day Low (or Competitive) Pricing

29 Pie Chart humour…





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