Pricing Products:

Pricing Strategies:
 Price - Quality
Strategies
Price
Higher Lower

Higher
Premium Good-Value
Good-Value
Quality

Strategy Strategy
Strategy

Lower Overcharging
Overcharging Economy
Economy
Strategy
Strategy Strategy
Strategy
New Product Pricing
Strategies

Market
Market Skimming
Skimming Market
Market Penetration
Penetration
> Setting a High > Setting a Low
Price for a New Price for a New
Product to Product in Order
Maximize to Attract a Large
Revenues from Number of Buyers.
the Target Market.
> Results in a Larger
> Results in Fewer, Market Share.
More Profitable
Sales.
 Product Mix Pricing
Strategies
Product
Product Line
Line Pricing
Pricing
Setting
SettingPrice
PriceSteps
Steps Between
BetweenProduct
Product Line
Line Items
Items
i.e.
i.e.$299,
$299,$399
$399
Optional-Product
Optional-Product Pricing
Pricing
Pricing
Pricing Optional
Optionaloror Accessory
AccessoryProducts
Products
Sold
SoldWith
WithThe
TheMain
Main Product
Product
i.e.
i.e.Car
CarOptions
Options
Product
Product Captive-Product
Captive-Product Pricing
Pricing
Pricing
PricingProducts
ProductsThat
ThatMust
MustBe
BeUsed
Mix
Mix With
Used
WithThe
TheMain
MainProduct
Product
Pricing
Pricing i.e.
i.e.Razor
RazorBlades,
Blades,Film,
Film,Software
Software
Strategies
Strategies By-Product
By-Product Pricing
Pricing
Pricing
Pricing Low-Value
Low-ValueBy-Products
By-ProductsToToGet
GetRid
Rid
of
of Them
Them
i.e.
i.e. Lumber
LumberMills,
Mills,Zoos
Zoos
Product-Bundle
Product-Bundle Pricing
Pricing
Pricing
PricingBundles
BundlesOfOfProducts
ProductsSold
Sold Together
Together
i.e.
i.e.Season
Season Tickets,
Tickets,Computer
ComputerMakers
Makers
 Price-Adjustment
Strategies
Price
Price Adjustment
Adjustment Strategies
Strategies

Discount
Discount &
& Allowance
Allowance
Reducing Segmented
Segmented
ReducingPrices
Pricesto
toReward
Reward Adjusting
Customer
Customer Responses
Responsessuch
suchasas AdjustingPrices
Pricesto
toAllow
Allow
Paying for
for Differences
Differencesin
inCustomers,
Customers,
PayingEarly
Earlyor
orPromoting
Promoting Products,
the
theProduct.
Product. Products,or
orLocations.
Locations.

Cash
Cash Discount
Discount Customer
Customer

Quantity
QuantityDiscount
Discount Product
Product Form
Form

Functional
FunctionalDiscount
Discount Location
Location

Seasonal
SeasonalDiscount
Discount Time
Time

Trade-In
Trade-InAllowance
Allowance
 Price-Adjustment
Strategies

• Adjusting Prices for Psychological

Psychological Pricing Effect.
•Price Used as a Quality Indicator.

• Temporarily Reducing Prices to

Promotional Pricing Increase Short-Run Sales.
• i.e. Loss Leaders, Special-Events

• Adjusting Prices to Account for the

Geographic Location of Customers.
Geographical Pricing • i.e. FOB-Origin, Uniform-Delivered,
Zone Pricing, Basing-Point, &
Freight-Absorption.

• Adjusting Prices for International

International Pricing Markets.
• Price Depends on Costs, Consumers,
Economic Conditions & Other Factors.
Initiating and Responding to Price
Changes
Competitor
Reactions
to Initiating
Price Price Cuts
Changes

Price
Changes
Buyer
Reactions Initiating
to Price
Price Increases
Changes
Price-Adjustment
Price-Adjustment Strategies
Strategies
No
Has
HasCompetitor
CompetitorCut
Cut
Price? Hold
HoldCurrent
Current Price;
Price;
Price?
Continue
ContinuetotoMonitor
Monitor
Competitor’s
Competitor’sPrice.
Price.

Will No
WillLower
Lower Price
Price
Negatively
NegativelyAffect
AffectOur
Our
Market
MarketShare
Share&& Profits?
Profits?
Reduce
ReducePrice
Price

No Raise
RaisePerceived
Perceived
Quality
Quality
Can/
Can/Should
Should Effective
Effective
Action Yes
Actionbe
beTaken?
Taken? Improve
ImproveQuality
Quality
&& Increase
IncreasePrice
Price
Launch
Launch Low-Price
Low-Price
“Fighting
“FightingBrand”
Brand”