Professional Documents
Culture Documents
Pricing Products:
Pricing Strategies
Week # 12 & 13
Price
Higher Lower
Strategy Strategy
Overcharging Economy
Lower Strategy Strategy
…
• Captive- product pricing: Low price are offered for the
core product, but high prices are placed on captive products.
This attracts customers to the core product with a
low price but allows sellers to make a profit off
the captive products, which are necessary to use the product.
• Setting the price for by-products in order to make the price of
the main product more competitive. For example, in producing
processed meats, chemicals, or oil there are often by-
products, which – if they had to be disposed of – would make
the main product uncompetitive.
• For example in the extraction of petrol or in textile industries
which produce the main product also produces the byproduct
like crude oil. The essential or the main product is expensive
while on the other hand the byproduct is less expensive
product.
….
Trade-In Allowance
Continue…
Promotional Pricing
Geographical Pricing
• "FOB price" means that the seller pays for transportation of the
goods to the port of shipment, plus loading costs. The buyer
pays cost of marine freight transport, insurance, unloading,
and transportation from the arrival port to the final destination.
• Free on Board (or Freight on Board). This basically means that
the cost of delivering the goods to the nearest port is included
but YOU, as the buyer, are responsible for the shipping from
there and all other fees associated with getting the goods to
your country/address.
• Freight-Absorption.: A geographic pricing strategy in which a
company absorbs all or part of the freight charges in delivering
the goods in order to capture the business.
Changes
Competitor
Reactions
to Initiating
Price Price Cuts
Changes
Price
Changes
Buyer
Reactions Initiating
to Price
Price Increases
Changes
Reduce Price
No Raise Perceived
Can/ Should Effective Quality
Action be Taken?
Yes Improve Quality
& Increase Price
Launch Low-Price
“Fighting Brand”
Determine demand
Estimate costs
• Promotional Mix
• Integrated Marketing Communications
(IMC)
• Communication
• Source
• Message
• Channel of Communication
• Receivers
Copyright 1999 Prentice Hall Slide 18-6
11-25
FIGURE 18-1 The communication process
• Feedback
Feedback Loop
Response
Feedback
Pretesting
• Noise
INTEGRATED MARKETING
COMMUNICATIONS—DEVELOPING
THE PROMOTIONAL MIX
• Channel Strategies
Push Strategy
Pull Strategy
• Direct-to-Consumer
• Interest
• Evaluation
• Trial
• Adoption
Distribution Channels
Place = Distribution
• The 4Ps
– Product, Price, Place, Promotion
DISTRIBUTION CHANNELS
Final
Consumer
Producers Middlemen Or
Business
User
Type Number of
of potential
Market customers
Geographic Order
concentration size
Perishability
Unit
Value
Technical
Nature
Services provided by
middlemen
Availability of desired
middlemen
Producer’s and
middlemen’s policies
Desire
for channel control
Services provided
by seller
Ability
of management
Financial resources
Horizontal
Different types
Middlemen
of middlemen
of the same type
on the same level
Vertical
Producer
vs.
Wholesaler
Producer
vs.
Retailers
Thanks