Pricing Strategy. Yearbook How much would you be willing to spend for: How much would you be willing to spend for: –Your high school yearbook as a senior.

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Presentation transcript:

Pricing Strategy

Yearbook How much would you be willing to spend for: How much would you be willing to spend for: –Your high school yearbook as a senior –Your ticket to the junior or senior prom We each place different value (and willing to pay different price) for the same product We each place different value (and willing to pay different price) for the same product

Example 4 You made T-shirts for Girls Lax and cost you $4/shirt You made T-shirts for Girls Lax and cost you $4/shirt You sell each shirt for $10/shirt? You sell each shirt for $10/shirt? Whats the margin or profit? Whats the margin or profit? Would lowering the selling price to $7 increase profits? Would lowering the selling price to $7 increase profits?

Tickets Brockton Rox tickets are $6. They dont offer discount tickets. Why? Brockton Rox tickets are $6. They dont offer discount tickets. Why?

Substitutes – Brand Loyalty There are lots of products with available substitutes (cereals, detergents, etc.) There are lots of products with available substitutes (cereals, detergents, etc.) Name a product where you would not accept a substitute? Name a product where you would not accept a substitute?

Luxury vs. Necessity 4 Gym membership Gym membership Cell phone Cell phone Cold medicine when youre sick Cold medicine when youre sick Gas for your car Gas for your car

Urgency of Purchase 4 When was the last time you bought something because of a time restriction? When was the last time you bought something because of a time restriction? HHS tickets going on sale – more at door? HHS tickets going on sale – more at door? Gas when your car was on empty Gas when your car was on empty Infomercial with time winding down Infomercial with time winding down

Price wars 4 Airline tickets, gasoline, computers Airline tickets, gasoline, computers How much does price factoring in the three products named above? How much does price factoring in the three products named above? Is anyone loyal to an airline? Why? Is anyone loyal to an airline? Why? Frequent flyer miles Frequent flyer miles

Product life cycle 5 Where do the following products fall within the four phases (think about prices as the product moves from Introduction>Growth>Maturity>Decline: Where do the following products fall within the four phases (think about prices as the product moves from Introduction>Growth>Maturity>Decline: Cell phone Cell phone Ipod Ipod Paper clips Paper clips Typewriter Typewriter

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