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Market-Based Management, 4th edition

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Presentation on theme: "Market-Based Management, 4th edition"— Presentation transcript:

1 Market-Based Management, 4th edition
Market-Based Pricing and Pricing Strategies Chapter Eight

2 Market-Based Pricing and Pricing Strategies
Chapter Eight Market-Based Pricing Vs. Cost-Based Pricing Pricing Strategies and the Product Life Cycle Pricing Metrics Price Elasticity Cross Price Elasticity

3 Market-Based Pricing What is Market-Based Pricing?
What is necessary for firms to engage in Market-Based Pricing? Competitor Intelligence Customer Intelligence

4 Market-Based Pricing Strategies
Skim Pricing Value In-Use Pricing Perceived Value Pricing Segment Pricing Strategic Account Pricing Plus-One Pricing At what stages in the product life cycle (PLC) should these strategies be employed?

5 Product Life Cycle Pricing Strategies
Plus-One Pricing Strategic Acct. Pricing Segment Pricing Market Demand Perceived Value Pricing Value-In-Use Pricing Skim Pricing Time

6 Cost-Based Pricing What is Cost-Based Pricing?

7 Cost-Based Pricing Strategies
Floor Pricing Cost-Plus Pricing Penetration Pricing Low-Cost Leader Pricing Competitive Bid Pricing Harvest Pricing At what stages in the PLC should these strategies be employed?

8 Product Life-Cycle Pricing Strategies
Competitive Bid Pricing Harvest Pricing Low-Cost Producer Pricing Market Demand Penetration Pricing Cost-Plus Pricing Floor Pricing Time

9 Pricing Orientation and Pricing Strategies

10 Pricing Metrics Total Contribution Price and Break-Even Volume
Total Contribution = Volume (units) X Margin (per unit) Price and Break-Even Volume Break-Even Volume = Fixed Expenses/Margin per Unit Price and Break-Even Market Share Break-Even Market Share = Break-Even Volume/Market Demand

11 Forces that Shape Price Elasticity
Ease of Customer Switching Product Differentiation Cost of Switching Suppliers Customer Loyalty Ease of Switching Index Supply/Demand Conditions Supply Conditions Demand Conditions Substitutes Supply/Demand Index

12 Price Elasticity and Performance

13 Guidelines for Estimating Price Elasticity

14 Takeaways/Review Importance of Market- Based Pricing
Market-Based Pricing Strategies Cost-Based Pricing Strategies Product Life Cycle and Pricing Strategies Pricing Metrics Price Elasticity Forces, Estimation, and Performance

15 Marketing Performance Tools
Sales and Profit Impact of Price Elasticity and Price Change

16 Marketing Performance Tools
Sales and Profit Impact of Price Change with Product Substitutes

17 Marketing Performance Tools
Sales and Profit Impact of Price Change with Product Substitutes

18 Marketing Performance Tools
Sales and Profit Impact of Price Change with Complimentary Products

19 Marketing Performance Tools
Sales and Profit Impact of Price Change with Complimentary Products


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