GROUP 2 Topic:

Competition – based pricing

Other internal and external consideration

1. Nguyễn Phương Thảo

2. Nguyễn Thị Hải Yến
3. Hoàng Thị Hồng Hà
 Competition – based pricing
Other internal and external consideration

 Main Contents:

1. Competition – based pricing

2. Other internal and external

consideration
1. Competition – based pricing

* Competition – based pricing :Setting

prices based on competitors’ strategies,
prices, costs, and market offerings.

* Consumers will base their judgments

of a product’s value on the prices that
competitors charge for similar
products.
 1. Competition – based pricing

 In assessing competitors’ pricing strategies, a company

should ask several questions.

 First, how does the company’s market offering

compare with competitors’ offerings in terms of
customer value?

 If consumers perceive that the company’s

product or service provides greater value, the
company can charge a higher price. If
consumers perceive less value relative to
competing products, the company must either
charge a lower price or change customer
perceptions to justify a higher price.
 Next, how strong are current competitors, and what
are their current pricing strategies?

 If the company faces a host of smaller competitors

charging high prices relative to the value they deliver,
it might charge lower prices to drive weaker
competitors from the market. If the market is
dominated by larger, lower-price competitors, a
company may decide to target unserved market niches
by offering value-added products and services at
higher prices.
 Importantly, the goal is not to match or beat
competitors’ prices. Rather, the goal is to set prices
according to the relative value created versus
competitors.If a company creates greater value for
customers, higher prices are justified.
Other Internal and External Considerations Affecting
Price Decisions
Beyond customer value perceptions, cost, and competitor strategies, the company
must consider several additional internal and external factors.

Internal factors affecting

pricing include the External factors
company’s overall Pricing include the nature or
marketing strategy, the market and demand
objectives and marketing
Decisions
and other
mix as well as other environmental factors.
organizational
considerations.
 Other Internal and External Considerations
Affecting Price Decisions
Overall Marketing Strategy, Objectives, and Mix

 Price is only one element of the company’s broader marketing strategy.

• So, before setting price, the company must decide on its overall market
strategy for the product or service.
• Sometime, a company’s overall strategy is built around its price and value
story.
 For example, grocery retailer
Trader Joe’s unique price value
positioning has made it one of
the nation’s fastest growing,
most popular food stores.
 Overall Marketing Strategy, Objectives, and Mix

Pricing objectives
Pricing may play an important role in helping to accomplish company objectives
at many levels:

 A firm can set prices to attract new customer or profitably retain existing
ones.
 It can set prices low to prevent competition from entering the market or set
prices at competitor’s levels to stabilize the market.
 It can price to keep the loyalty and support of resellers or avoid government
intervention.
 Price can be reduced temporarily to create excitement for a brand
 Overall Marketing Strategy, Objectives, and Mix
 Price decisions must be coordinated with product design, distribution, and
promotion decisions to from a consistent and effective integrated marketing
mix program.
 Positioning may be based on price.
 Price is a crucial product positioning factor that defines the product’ market,
competition, and design.
 Non- price positions can be created to differentiate the marketing offer.
Overall Marketing Strategy, Objectives, and Mix

Target costing
 It starts with ideal selling price based on customer value considerations and
then targets costs that will ensure that the price is met.
o Many firms support such price positioning strategies with a technique
called “target costing”.

Thus, marketers must consider the total marketing strategy

and mix when setting price.