PRICING, UNDERSTANDING AND CAPTURING CUSTOMER VALUE

PRICING STRATEGY
LEARNING OBJECTIVE

1 What is price?

2 Major pricing strategies

3 New product pricing strategies

4 Product mix pricing strategies

5 Price change
LEARNING OBJECTIVE

1 What is price?

5
Price
The amount of money charged for a product or service, or the
sum of the values that customers exchange for the benefits of
having or using the product or service.
LEARNING OBJECTIVE

2 Major pricing strategies

5
CONSUMER VALUE-BASED PRICING
Setting price based on buyers’ perceptions
of value rather than on the seller’s cost.
COST BASED PRICING

Setting prices based on the costs of producing,

distributing, and selling the product plus a fair
rate of return for effort and risk.
COMPETITION BASED PRICING
Setting prices based on competitors’
strategies, prices, costs, and market COMPETITOR 1 MY PRICE COMPETITOR 2
offerings.

$ 90 $ 95 $ 99
LEARNING OBJECTIVE

3 New product pricing strategies

5
MARKET-SKIMMING PRICING
Setting a high price for a new
product to skim maximum
revenues layer by layer from the
segments willing to pay the high
price; the company makes fewer
but more profitable sales.
MARKET PENETRATION PRICING
Setting a low price for a new product in
order to attract a large number of
buyers and a large market share.
LEARNING OBJECTIVE

4 Product mix pricing strategies

5
FIVE PRODUCT MIX PRICING STRATEGIES
PRODUCT LINE PRICING OPTIONAL-PRODUCT PRICING CAPTIVE-PRODUCT PRICING
Setting prices across an entire Pricing optional or accessory products Pricing products that must be used
product line sold with the main product with the main product
BY-PRODUCT PRICING PRODUCT BUNDLE PRICING
Pricing low-value by-products to get rid of or Pricing bundles of products sold together
make money on them

cheese makers in Wisconsin have

discovered a use for their leftover brine,
a salt solution used in the cheese-
making process. Instead of paying to
have it dis- posed of, they now sell it to
local city and county highway
departments, which use it in conjunction
with salt to melt icy roads
SEVEN PRICE ADJUSTMENT
STRATEGIES
DISCOUNT AND ALLOWANCE PRICING SEGMENTED PRICING PSYCHOLOGICAL PRICING
Reducing prices to reward customer
responses such as volume purchases, paying Adjusting prices to allow for differences in Adjusting prices for psychological
early, or promoting the product customers, products, or locations effect
PROMOTIONAL PRICING GEOGRAPHICAL PRICING
Temporarily reducing prices to spur short-run Adjusting prices to account for the
sales geographic location of customers
DYNAMIC PRICING INTERNATIONAL PRICING
Adjusting prices continually to meet the Adjusting prices for international markets
characteristics and needs of individual
customers and situations
LEARNING OBJECTIVE

5 Price change
RESPONDIING TO COMPETITIOE
PRICE CHANGE
• THANK YOU