Professor Waldemar A. Pfoertsch 弗沃德
Term 4/MBA 2006 Oct. 8 -28, 2007

• 40 % Max. 3 Students, Max. 20 pages
• Academic paper on a Business marketing topic of interest to the group (format
Journal of Marketing), or
• a case study based on your own experience/company interviews and an analysis of the resolution –
• due date November 2

• …
Project ideas please submit till Friday

Learning Of Today:
Dynamics of Pricing
• China Pricing abroad
• Selected Pricing issues
• Price wars
• Case:
– Trilogy Corporation
– Texas Instruments

China Pricing Abroad
• Global competition
• Changes of the local conditions
• Exchange rate fluctuations

Plus expected exchange
Rate fluctuations of 5%
Plus existing exchange
Rate differences to the
EURO of 25%
Financial Time, Oct. 16, 2007

Financial Time, Oct. 16, 2007

The power in industrial power tool brands
2005 2007

Intel Changes Its Competitive
Pricing For Microprocessors
• Innovation Leader
• Ingredient Branding
• Price Leader

Price as part of a total offering - the value statement to the customer
• The key idea is to set price level in such a way that superior value is created for customers.
• Value is composed of benefits received by customers, less the customers’ costs.
• These costs include the price of the product or service.

Objectives Addressed by Pricing
Strategic Purposes
• Achieving a target level of profitability
• Building goodwill, or relationships, in a market or among certain customers
• Penetration of a new market or segment
• Maximizing profit for a new product
• Keeping competitors out of an existing customer base

Objectives Addressed by Pricing
Tactical Purposes
• Winning the business of a new, important customer
• Penetrating a new account
• Reducing inventory levels
• Keeping the business of disgruntled customers
• Encouraging customers to try a product or service
• Encouraging sales of complementary products

Pricing Throughout the Product Life Cycle and the Technology Adoption Life Cycle
Competitive Pricing
Price Skimming
Penetration Pricing
Time
Price Skimming

Other Pricing issues
• Pricing in Translation Mode
• Pricing for International Marketing Efforts
• Tactical aspects
– Bundling
– Discounts
– …

• Northwest: “Grown-Ups With Kids
Fly Free”
• American Airlines: 50% cut for 3 month
• Others matched
• Result: SOLD OUT!

• Yield management
• “Every day low price”
• AA “Value Pricing”

Texas Instrument: Global Pricing
1.
What is TI’s current approach to pricing of semiconductors?
2. How is TI organized to manage its current pricing policy? In the US and outside the US?
3.
Why is Arrow requesting “global pricing”?
What is meant by global pricing?
4. What would be the implications of
“Global Pricing”?

Case Questions:
Trilogy Corporation
• Please Check the Case Study.
• Questions are at the end of the case.

Joe Liemandt

Trilogy’s Fast Cycle Time Approach

Example of Trilogy’s Business
Success Metrics

Comparison of Pricing Approaches

Classification of selected value-based Pricing Mechanism

Comparison of pricing approaches

Thank you!
谢谢！
Waldemar Pfoertsch
Professor Business Marketing
CEIBS
699 Hongfeng Road, Shanghai China