Professional Documents
Culture Documents
Pricing
Objectives and
Policies
Copyright2014byTheMcGrawHillCompanies,Inc.Allrightsreserved
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CH 16: Pricing
Objectives and
Policies
Pricing
objectives
Pricing
policies
Pricing and
customer value
16-4
Price Flexibility
Key
Pricing
Policies
Transportation
CostsWho Pays
& How
Discounts &
AllowancesTo
Whom & When
To
To the
the consumer,
consumer,
Price
Price is
is the
the cost
cost of
of
something
something
Price
Price allocates
allocates resources
resources
In
In aa free-market
free-market economy
economy
LO1
What Is Price?
Price
Price
LO1
What is Price?
Sacrifice Effect of Price
What is sacrificed to get a good or service
Money, Time, Dignity
LO1
Revenue
Revenue
Profit
Profit
LO1
The
Theprice
pricecharged
chargedto
to
customers
customersmultiplied
multipliedby
bythe
the
Number
Numberof
ofunits
unitssold.
sold.
Revenue
Revenueminus
minusexpense.
expense.
LO1
U.S.
U.S.recession
recessionfrom
fromlate
late2007
2007to
to2009.
2009.
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Something of
Value
Price
List Price
Less: discounts
Quantity
Seasonal
Cash
Temporary sales
Less: allowances
Trade-ins
Damaged goods
Less: rebate & coupon
Plus: transportation and
taxes
Exchange
Product
Physical good
Service
Assurance of quality
Repair facilities
Packaging
Credit Warranty
Place of delivery or when
available
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Something of
Value
Price
List Price
Less: discounts
Quantity
Seasonal
Cash
Trade or functional
Temporary deals
Less: allowances
Damaged goods
Advertising
Push money
Stocking fees
Plus: transportation, taxes,
tariffs, and costs of
handling or disposal
Exchange
Product
Brandedwell known
Guaranteed & warranted
Service/repair facilities
Convenient packaging
Place
Availability/when/where
Promotion
Promotion aimed at enduser customers
Price
Price-level guarantee
Sufficient margin &
inventory turns to allow
for profit
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Pricing
objectives
Sales oriented
Dollar or unit
sales growth
Growth in market
share
Status quo
oriented
Meeting
competition
Nonprice
competition
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Flexible Price
Policy
Different
customers,
different prices
databases make it
easier
salespeople can
adjust prices
Too much cutting
can hurt profits
OR
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$60
$40
$20
$20
$10
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Price-Level
Policies Over
the Product
Life Cycle
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Quantity
Seasonal
From
List Price
Sale
Cash
Trade
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Advertising
Stocking
Common
Types of
Allowances
Trade-Ins
Push Money
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Zone
Common
Geographic
Policies
Freight
Absorption
Uniform
Delivered
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Dumping
Key
Issues
Price Fixing
Phony List
Prices