DEVELOPING PRICING STRATEGIES & PROGRAMS

Presented by Sony Kusumasondjaja, SE, M.Com

UNDERSTANDING PRICING

Price has operated as the major determinant of buyer choice, especially in poorer nations, among poorer groups, and with commoditytype products Although non-price factors have become more important in recent decades, price still remains one of the most important elements determining market share and profitability

CONSUMER PSYCHOLOGY & PRICING

Consumers often actively process price information, interpreting prices in terms of their knowledge from prior purchasing experience, formal communications, informal communications, and point-ofpurchase or online resources Purchase decisions are based on how consumers perceive prices and what they consider to be the current actual price, not the marketers stated price

REFERENCE PRICES

When examining products, consumers often employ reference prices In considering an observed price, consumers often compare it to an internal reference price or an external frame of reference

PRICE-QUALITY INFERENCES

Many consumers use price as an indicator of quality When alternative information about true quality is available, price becomes a less significant indicator of quality. However, when the information is not available, price acts as a signal of quality

PROCEDURES IN SETTING PRICING STRATEGY

SELECTING THE PRICING OBJECTIVE DETERMINING DEMAND ESTIMATING COSTS ANALYZING COMPETITORS COSTS, PRICES, AND OFFERS SELECTING PRICING METHODS SELECTING THE PRICE

SELECTING THE PRICE OBJECTIVE

SURVIVAL MAXIMUM CURRENT PROFIT MAXIMUM MARKET SHARE MAXIMUM MARKET SKIMMING PRODUCT-QUALITY LEADERSHIP OTHER OBJECTIVE

SELECTING A PRICING METHOD

MARKUP PRICING TARGET RETURN PRICING PERCEIVED VALUE PRICING VALUE PRICING GOING RATE PRICING AUCTION TYPE PRICING

ADAPTING THE PRICE

GEOGRAPHICAL PRICING PRICE DISCOUNTS & ALLOWANCES PROMOTIONAL PRICING DIFFERENTIATED PRICING