SETTING A PRICING POLICY

1. Selecting the pricing objective

Survival.
Maximum current profit.
Maximum current revenue.
Maximum sales growth and market share.
Maximum market skimming.
Product-quality leadership.

2. Determining demand
3. Estimating costs
4. Analyzing competitors costs, prices and offers
5. Selecting a Pricing Method
a) Mark-up pricing
b) Target-return pricing
c) Going-Rate Pricing
d) Perceived-value pricing
e) Value pricing- EDLP & High-Low Pricing
f) Auction-Type Pricing- English auctions (ascending bids), Dutch auctions (descending bids),
Sealed-bid auctions
g) Group Pricing

6. Selecting the final price

a) Impact of other marketing activities
b) Company pricing policies
c) Gain-and-risk sharing pricing
d) Impact of price on other parties
e) Psychological pricing
f) The influence of other marketing-mix elements
PRICE-ADAPTATION STRATEGIES
Price adaptation is the ability of a business to change its pricing models to suit different geographic
areas, consumer demands and prevailing incomes.
1. Geographical pricing
2. Price discounts and allowances- Cash Discount, Quantity Discount, Functional Discount,
Seasonal Discount, Promotional Allowances
3. Promotional pricing - special-event pricing, cash rebates, low interest financing, longer payment
terms, warranties and service contracts and psychological discounting.
4. Differentiated pricing - Price discrimination
5. Product-mix pricing- Product line pricing, Optional-feature pricing, Captive-product pricing, Two-
part pricing, Product-bundling pricing
INITIATING AND RESPONDING TO PRICE CHANGES
1. Initiating Price Cuts
2. Initiating Price Increases