PRICE

PRODUCT
PLACE
PROMOTION

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PRICING FOR SUCCESS

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Boundari
es of
Price

PRICE FLOOR

DICTATED BY YOUR PRODUCT

COSTS

PRICE CEILING
DICTATED BY YOUR
COMPETITORS
&
COMPARABLE
SUBSTITUTES

Approaches to Pricing

PRICE
DRIVE
RS
S

POPULAR PRICING STRATEGIES

Market Skimming Pricing

Penetration Pricing
Cost-Based Pricing
Value-Based Pricing
Competitor-Based Pricing

MARKET SKIMMING

Charging a premium price at

introduction, and lowering prices
strategically, ensuring that
consumers who are willing to pay
more, will pay the higher prices.
May occur at the introduction stage of
product life cycle

PENETRATION PRICING

Charging a low price in order to

penetrate market quickly
Appropriate to saturate market prior
to imitation by competitors

COST-BASED PRICING
Full absorption cost method
Rigid cost-plus pricing
Flexible cost-plus pricing

VALUE-BASED PRICING
Charges fairly low price for a high
quality offering.
Associated with lowered cost of
operations

COMPETITOR-BASED PRICING

CONSIDERATIONS FOR SETTING PRICE

Does the price reflect the products

quality?
Is the price competitive given local
market conditions?
Should firm pursue market penetration,
market skimming, or some other pricing
objective?
What types of discounts or allowances
should be offered to international
customers?

CONSIDERATIONS FOR SETTING

PRICE (CONT.)

Should prices differ with market

segment?
What pricing options are available if the
firms costs increase or decrease? Is
demand in the international market
elastic or inelastic?
Are the firms prices likely to be viewed
by the host-country government as
reasonable or exploitative?
Do the foreign countrys dumping laws
pose a problem?