CHAPTER SIXTEEN
Pricing Objectives and
Policies
For use only with
Perreault/Cannon/McCarthy
or Perreault/McCarthy texts.
© 2008 McGraw-Hill
Companies, Inc.
McGraw-Hill/Irwin
www.mhhe.com/fourps
Strategy Planning and Pricing Objectives and
Policies (Exhibit 16-1)
CH 16: Pricing
Objectives and
Policies
Pricing
objectives
Pricing
policies
CH 17: Price Setting
in the Business World
Pricing and
customer value
Legal issues and
pricing policies
Price Has Many Strategy Dimensions
Price Levels Over
Product Life Cycle
Price Flexibility
Key
Pricing
Policies
Transportation
Costs – Who Pays
& How
Discounts &
Allowances – To
Whom & When
The Price Equation: Price Equals Something of
Value (Exhibit 16-2)
Price as Seen by Channel Members
(Exhibit 16-3)
Objectives Should Guide Strategy Planning for Price
(Exhibit 16-4)
Most Firms Set Specific Pricing Policies to Reach
Objectives
Flexible-Price
Policy
One-Price
Policy
•
The same for
everyone
•
Frequently
purchased items
•
Convenient
•
Low cost
•
Maintains goodwill
OR
•
Different
customers,
different prices
•
Databases make
it easier
•
Salespeople can
adjust prices
•
Too much cutting
can hurt profits
Skimming vs. Penetration (Exhibit 16-5)
Discount Policies: Reductions from List Prices
Quantity
Seasonal
From
List Price
Sale
Cash
Trade
Allowance Policies – Off List Prices
Advertising
Stocking
Common
Types of
Allowances
Trade-Ins
Push Money
List Price May Depend on Geographic Pricing
Policies
F.O.B.
Zone
Common
Geographic
Policies
Freight
Absorption
Uniform
Delivered
Legality of Pricing Policies
Unfair Trade
Practice Acts
Dumping
Key
Issues
Price Fixing
Phony List
Prices
Price Discrimination
“Like Grade &
Quality”
RobinsonPatman Act
“Proportionately
Equal” Basis
Key
Issues
Meeting
Competition
Cost
Differences