Pricing

COM 382
 Pricing
Pricing
Price=quantity of money received by
seller/quantity of goods and services
received by the beller
 Pricing
Pricing objective
• Maximize the current profits and return on
investment
• Exploit competitive position
• Survival in a competitive market
• Balance price over product line
 Pricing
• Demand estimation
• Price sensitivity
Price band / price probing- the minimum and
the maximum price the customer is willing
to pay
Sequential preferences- used in telephone
surveys, or personal interviews, the
customer is asked to select a brand at
different price levels.
 Pricing

Demand
Corporate
objective
Government
policy

Price

Competitor
Barriers in industry reactions
Like technology,
Exit barrier
Costs
 Pricing strategies
Pricing strategies dependent upon
• Corporate goal and characteristics
• Customer characteristics
• Intensity of inter firm rivalry
• Phase of the product life cycle
A Skimming Strategy refers to s firms desire to
skim the market by selling at premium price,
while in Penetration Strategy, when prices are
kept lower than its competition, the firm aims at
gaining a foothold in a highly competitive market
 Pricing strategies
• Differential pricing strategy- the firm prices its products across
different market segments, while Geographical Pricing strategy
seeks to exploit economies of scale, by pricing the product below
the competitors in one market, and adopting a penetration strategy
in another
• Product line pricing strategies
 Price bundling
 Premium pricing
 Image pricing
 Complementary pricing
 Captive pricing strategy
 Loss leader strategy
 Two part pricing