Uploaded by Jiayi Miao

MKTG716 Week#10 SummarySlides

advertisement
Part 3: Designing a Customer-Driven Marketing Strategy
and Marketing Mix
CHAPTER 10
Pricing:
Understanding
and Capturing
Customer Value
10-1
Copyright © 2017 Pearson Canada Inc.
1
Chapter 10
Pricing: Understanding and Capturing Customer Value
Chapter 10: Learning Objectives
10-2
1
Identify the three major pricing strategies and discuss the
importance of understanding customer-value perceptions,
company costs, and competitor strategies when setting
prices.
2
Describe the major strategies for pricing new products and
how companies use product mix pricing
3
Discuss how companies adjust their prices to take into
account different types of customers and situations
Copyright © 2017 Pearson Canada Inc.
Chapter 10
Pricing: Understanding and Capturing Customer Value
What is Price?
What is price?
• The total value that
customers exchange for
the benefits of having or
using the product or
service
10-3
Copyright © 2017 Pearson Canada Inc.
Chapter 10
Pricing: Understanding and Capturing Customer Value
Considerations in Setting Price
10-4
Copyright © 2017 Pearson Canada Inc.
Chapter 10
Pricing: Understanding and Capturing Customer Value
Pricing Strategies
Strategy
10-5
Description
Customer valuebased
Pricing based on buyer
perception
Cost-based
Pricing based on seller costs
Competition-based
Pricing based on competitors
Copyright © 2017 Pearson Canada Inc.
Chapter 10
Pricing: Understanding and Capturing Customer Value
Pricing Strategies
• Value-based pricing versus cost-based pricing:
10-6
Copyright © 2017 Pearson Canada Inc.
https://www.google.ca/search?q=Lauren+Harris+Paining&rlz=1C1GGRV_enCA751CA751&oq=Lauren+Harris+Paining&aqs=chrome..69i57j0l5.6285j0j7&sourceid=chrome&ie=UTF-8
Confidential
Confidential
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Pricing Strategies
Customer Valued-Based Pricing
Considerations
• Customer needs
Strategies
• Good-Value Pricing:
• Overall benefits = price
• Value-Added Pricing:
• Customer perceptions
• Overall benefits = same or
higher price
• Price based on
perception of value
10-10
Copyright © 2017 Pearson Canada Inc.
Elizabeth Arden vs Pond’s
What’s the price?
https://www.google.ca/search?q=Elizabeth+Arden+vs+Pond+eye+capsules&rlz=1C1GGRV_enCA751CA751&source=lnms&tbm=isch&sa=X&ved=0ahUKEwiTpNqu2-bWAhXJ34MKHcY0CXwQ_AUICygC&biw=1366&bih=637
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Pricing Strategies
Cost-Based Pricing
Considerations
Strategies
• Total costs (fixed & variable) • Cost-plus (Mark-up)
set minimum price charged
pricing
• Product-driven
• Break-even pricing
• Target return pricing
10-12
Copyright © 2017 Pearson Canada Inc.
Cost Plus Pricing
https://www.google.ca/search?rlz=1C1GGRV_enCA751CA751&biw=1366&bih=637&tbm=isch&sa=1&q=Ragu+Images&oq=Ragu+Images&gs_l=psyab.3..0.23772.26504.0.26970.11.11.0.0.0.0.92.880.11.11.0....0...1.1.64.psy-ab..0.11.875...0i67k1j0i30k1j0i8i30k1.0.-sI-ziKEf44#imgrc=XH2JSOJdrnqYEM:
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Pricing Strategies
Competition-Based Pricing
Considerations
10-14
Strategies
• Customer’s frame of
reference
• Competitive pricing
• Competitors’
 Offering
 Market position
 Strengths & weaknesses
• Above, at or below
pricing
Copyright © 2017 Pearson Canada Inc.
https://www.google.ca/search?q=Spaghetti+Sauce+aslies&rlz=1C1GGRV_enCA751CA751&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjd1Kzs2-bWAhVs9YMKHZowDYcQ_AUICigB&biw=1366&bih=637#imgrc=mHU8EginD9WiFM:
Confidential
Competitive Pricing
https://www.google.ca/search?q=Spaghetti+Sauce+aslies&rlz=1C1GGRV_enCA751CA751&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjd1Kzs2-bWAhVs9YMKHZowDYcQ_AUICigB&biw=1366&bih=637#imgrc=mHU8EginD9WiFM:
Confidential
https://www.google.ca/search?q=Car+Battery&rlz=1C1GGRV_enCA751CA751&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjF8_L_2-bWAhVE7IMKHVvdDmMQ_AUICigB&biw=1366&bih=637
Confidential
$265
$145
$85
Installed
Installed
Not Installed
Pricing Strategy
Pricing Strategy
Pricing Strategy
What value offering
What value offering
What value offering
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Pricing Strategies
Strategy
10-19
Description
Customer valuebased
Pricing based on buyer
perception
Cost-based
Pricing based on seller costs
Competition-based
Pricing based on competitors
Copyright © 2017 Pearson Canada Inc.
$265
$145
$85
Installed
Installed
Not Installed
Pricing Strategy
Pricing Strategy
Pricing Strategy
Customer Value
Competitive
Cost Plus
Confidential
What Pricing Strategy?
https://www.google.ca/search?rlz=1C1GGRV_enCA751CA751&q=Four+Seasons+hotel+Images&oq=Four+Seasons+hotel+Images&gs_l=psy-ab.3..0i7i30k1l5j0.3919.4930.0.5464.6.6.0.0.0.0.133.577.5j1.6.0....0...1.1.64.psy-ab..0.6.576...0i7i10i30k1j0i13k1j0i8i7i30k1.0.dZ0jg9viQqM
Confidential
What Pricing Strategy?
https://www.google.ca/search?q=motel+6+images&rlz=1C1GGRV_enCA751CA751&oq=Motel+6+Image&aqs=chrome.0.0j69i57j0l4.8401j0j9&sourceid=chrome&ie=UTF-8
Confidential
What Pricing Strategy?
https://www.google.ca/search?q=westin+hotel+images&rlz=1C1GGRV_enCA751CA751&oq=Westin+Hotel+Image&aqs=chrome.0.0j69i57j0l4.4500j0j9&sourceid=chrome&ie=UTF-8
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Chapter 10: Learning Objectives
10-24
1
Identify the three major pricing strategies and discuss the
importance of understanding customer-value perceptions,
company costs, and competitor strategies when setting
prices.
2
Describe the major strategies for pricing new products and
how companies use product mix pricing
3
Discuss how companies adjust their prices to take into
account different types of customers and situations
Copyright © 2017 Pearson Canada Inc.
Part 3: Designing a Customer-Driven Marketing Strategy
and Marketing Mix
CHAPTER 10
Pricing:
Understanding
and Capturing
Customer Value
10-25
Copyright © 2017 Pearson Canada Inc.
25
Chapter 10
Pricing: Understanding and Capturing Customer Value
Chapter 10: Learning Objectives
10-26
1
Identify the three major pricing strategies and discuss the
importance of understanding customer-value perceptions,
company costs, and competitor strategies when setting
prices.
2
Describe the major strategies for pricing new products and
how companies use product mix pricing
3
Discuss how companies adjust their prices to take into
account different types of customers and situations
Copyright © 2017 Pearson Canada Inc.
Chapter 10
Pricing: Understanding and Capturing Customer Value
Factors Affecting Price
Additional Considerations of Pricing:
Internal Factors
External Factors
•
•
•
•
•
10-27
Corporate
strategy and
objectives
Other marketing
mix elements
Desired position
Brand
Copyright © 2017 Pearson Canada Inc.
•
•
•
•
Market and
demand
Price elasticity
Economic
conditions
Regulations
Social
awareness and
concerns
Chapter 10
Pricing: Understanding and Capturing Customer Value
Price-Demand Relationship
•
•
•
10-28
Demand Curve
Inverse
relationship
between price
and quantity
Price Elasticity
Copyright © 2017 Pearson Canada Inc.
Chapter 10
Pricing: Understanding and Capturing Customer Value
The Economy
•
Economic conditions
impact pricing
 Recession
 Inflation
 Interest rates
10-29
Copyright © 2017 Pearson Canada Inc.
Affect consumer spending
and consumer perceptions
of the product’s price
Chapter 10
Pricing: Understanding and Capturing Customer Value
Four Types of Markets
1. Pure competition
2. Monopolistic
competition
3. Oligopolistic
competition
4. Pure monopoly
10-30
Copyright © 2017 Pearson Canada Inc.
Match the Pricing Market
1. Pure
competition
2. Monopolistic
competition
3. Oligopolistic
competition
4. Pure monopoly
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Considerations in Setting Price
10-32
Copyright © 2017 Pearson Canada Inc.
Chapter 10
Pricing: Understanding and Capturing Customer Value
New-Product Pricing
Market
Skimming
For use when:
 Product’s quality and image
support a high price;
 Costs of low volume do not
cancel the benefit of higher
price;
 Competitors cannot easily enter
the market and undercut price
10-33
Copyright © 2017 Pearson Canada Inc.
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
New-Product Pricing
Market
Penetration
For use when:
 Market is price sensitive
 Costs fall as volume
increases
 Competition can be kept
out of market
10-35
Copyright © 2017 Pearson Canada Inc.
Razor Pricing
What Pricing Strategy?
Confidential
Ketel One Vodka
What Pricing Strategy?
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Product Mix Pricing
10-38
Strategy
Description
Product line pricing
Setting prices across an entire product
line
Optional-product
pricing
Pricing optional products sold with main
product
Captive-product
pricing
Pricing products which must be used with
main product
By-product pricing
Pricing by-products to make a main
product’s price more attractive
Product bundle
pricing
Pricing a bundle of individual products at
a price lower than if purchased
separately
Copyright © 2017 Pearson Canada Inc.
Chapter 10
Pricing: Understanding and Capturing Customer Value
Product line pricing
Optional-product pricing
Captive-product pricing
By-product pricing
Product bundle pricing
10-39
Copyright © 2017 Pearson Canada Inc.
Soup
Chapter 10
Pricing: Understanding and Capturing Customer Value
Chapter 10: Learning Objectives
10-40
1
Identify the three major pricing strategies and discuss the
importance of understanding customer-value perceptions,
company costs, and competitor strategies when setting
prices.
2
Describe the major strategies for pricing new products and
how companies use product mix pricing
3
Discuss how companies adjust their prices to take into
account different types of customers and situations
Copyright © 2017 Pearson Canada Inc.
Part 3: Designing a Customer-Driven Marketing Strategy
and Marketing Mix
CHAPTER 10
Pricing:
Understanding
and Capturing
Customer Value
10-41
Copyright © 2017 Pearson Canada Inc.
41
Chapter 10
Pricing: Understanding and Capturing Customer Value
Chapter 10: Learning Objectives
10-42
1
Identify the three major pricing strategies and discuss the
importance of understanding customer-value perceptions,
company costs, and competitor strategies when setting
prices.
2
Describe the major strategies for pricing new products and
how companies use product mix pricing
3
Discuss how companies adjust their prices to take into
account different types of customers and situations
Copyright © 2017 Pearson Canada Inc.
Chapter 10
Pricing: Understanding and Capturing Customer Value
Price Adjustment Strategies
• Segmented Pricing:
 Selling a product at two or more prices, where the
difference in prices is not based on differences in
costs
• Types:
 Customer-segment
 Product-form
 Location-based pricing
 Time-based pricing
10-43
Copyright © 2017 Pearson Canada Inc.
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Price Adjustment Strategies
• Psychological Pricing:
 Considers consumer
thought process, not
simply the economics
 The price is used to say
something about the
product
10-45
Copyright © 2017 Pearson Canada Inc.
Confidential
$26.99
$49.99
Confidential
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Price Adjustment Strategies
• Promotional Pricing:
 Discounts (loss leaders)
 Special-event pricing
 Cash rebates
 Low-interest financing
 Longer warranties
 Free maintenance
10-49
Copyright © 2017 Pearson Canada Inc.
Retail Price
$4.99
Gross Sale Price
$4.00
Pricing in the P&L
Trade Discounts
- Breakage
- Co-op Promo Support
$0.25
$0.75
Net Sales Price
$3.00
Retailer Margin: 25%
COGS
- Variable
Box, Ingredients, Labour
- Fixed
Plant OH, Utilities
$0.75
Total COGS
$1.00
Gross Profit
$2.00
$0.25
(Net Sales - COGS)
Advertising and Promotion
- Media and Production
- Sales Promotion
- Discounts
$0.25
$0.25
$0.50
Total A & P
$1.00
Indirects
$0.50
- Taxes, Salaries, Office
Net Profit
$0.50
Gross Profit - A&P - Ind
Confidential
SALE!
Confidential
Confidential
Confidential
On-Line Coupon
Copyright © 2014 Pearson Canada Inc.
Confidential
1-54
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Price Adjustment Strategies
• Geographical Pricing:
 Free on board-origin pricing
 Uniform-delivered pricing
 Zone pricing
• International Pricing:
 Adjusting prices for
international markets, subject
to many considerations
10-56
Copyright © 2017 Pearson Canada Inc.
Confidential
Duty Free 1L
$26.99
LCBO 750ml
$29.99
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Price Adjustment Strategies
• Dynamic Pricing:
 Allows price to change as customer and
situational forces change
 Consider the affect of the internet on pricing
 Benefits to marketers: Mine databases
 Benefits to consumers: Price comparison sites
10-59
Copyright © 2017 Pearson Canada Inc.
Chapter 10
Pricing: Understanding and Capturing Customer Value
Price Changes
• Price cuts may be initiated due to:
 Excess capacity
 Falling demand
 Drive to dominate market
• Price increases may be initiated due to:
 Cost inflation
 Over-demand
10-60
Copyright © 2017 Pearson Canada Inc.
Chapter 10
Pricing: Understanding and Capturing Customer Value
Price Changes
• Buyers will react – not always as expected!
• Competitors may react:
 Reduce price to match competition
 Raise the perceived value of its offer
 Improve quality and increase price
 Launch a low-price “fighting brand”
10-61
Copyright © 2017 Pearson Canada Inc.
Sunlight Example
1990
2017
$3.29
$1.99
Copyright © 2014 Pearson
Canada Inc.
1-62
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Public Policy and Pricing
• The Competition Act governs business practices.
 Price-fixing
 Bid-rigging
 Predatory pricing
 Price discrimination
 Functional discounts
 Retail price maintenance
 Deceptive pricing
10-63
Copyright © 2017 Pearson Canada Inc.
Confidential
Chapter 10
Pricing: Understanding and Capturing Customer Value
Chapter 10: Learning Objectives
10-65
1
Identify the three major pricing strategies and discuss the
importance of understanding customer-value perceptions,
company costs, and competitor strategies when setting
prices.
2
Describe the major strategies for pricing new products and
how companies use product mix pricing
3
Discuss how companies adjust their prices to take into
account different types of customers and situations
Copyright © 2017 Pearson Canada Inc.
Download