Presentation on Term

Paper
Presented to,
Md. Ruhul Amin
Lecturer
Dept. of Agribusiness
BSMRAU Presented by,
Kishwar Masroor Raha (20-05-5423)
Suraiya Yeasmin Zerin (20-05-5477)
Sadia Rahaman Mohima (20-05-5474)
Ramisha Rawnok Nir (20-05-5451)
Bushra Jahan (20-05-5483)
Md. Sazzad Arefin Shezan (20-05-5482)
Samia Shamim (20-05-5415 )
 Chapter-1
Introduction to
Strategic Pricing
INTRODUCTION TO
STRATEGIC PRICING

4 Ps of Marketing

Product Promotion Placement Price

How do your How much do you

What you sell. Could
customers find out Where do you charge and how does
be a physical good,
about you? What promote your product that impact how your
services, consulting,
strategies do you use, or service? customers view your
etc.
and are they effective? brand?
TRADITIONAL PRICING
VS STRATEGIC PRICING
Strategic pricing –
*Sets price based on the
products value to the
customer.
1.Value based pricing strategy
2.Pro-active pricing strategy
3.Profit driven pricing strategy
*Value creation forms the
foundation of strategic pricing
pyramid.
Traditional pricing –
*Set the price based on
the cost of production.
CCCS OF MARKETING AND PRICING
(STRATEGIC FRAMEWORK)
Jeff bezos was clever
enough in
formulating the
vision statement as
Cost based “To be the most
Customer customer centric
CCCs based company in the
Competition
based
earth”
Should be some extra
ordinary factors to
retain in the market
with the competitors.
VALUE• Value
CASCADE
creation gap = Actual value – potential value
• Value communication gap = If the company is able to convey
the value of the product
• Price policy gap = Willingness to pay – target price
VALUE
COMMUNICATION
How to successfully communicate the value of your brand to
customers-
Identify what value means to your each of your
stakeholders.
Define what your product or service does, focusing first on
benefits and then on features.
Understand how your stakeholders consume and process.
Monitor, measure and continuously improve
 Chapter-2
A Guiding Force
Value
 Value =
Satisfaction Use of value = Utility
The Role of
Value in
Pricing Monetary value

Economic
Value Psychological value
 Positive
Differentiate
value
Differential Value
Negative
Differentiate
Economic Reference value
Value Value
Estimation

Total Economic Value = Differential Value +

Reference Value
 Market myopia

Identifying the Multiple

NBCA alternative
Competitive Challenges
Customers
Reference
apathy
Prices
To establish the competitive
reference price
 Customer Marketing
segmentation segmentation
Setting the price
based on value
Value based
segmentation
 Determine basic criteria

Identify discriminating factors

Determine constraints and advantages

Value based
segmentation
Create primary and secondary segment

Describe segments

Develop metrics and fences

 Chapter-3
Pricing Under Customer Uncertainty
 Pricing
(consumer uncertainty)

Customers don not know

the reference price?

Set Strategies for good deal

 Add a high price and
low price intentionally

Product line
1 Strategy same brand

decoy
 Proportional

Customer prefers
proportional discount rather
than absolute discount
2 Discounting

Credible

Discount percentage
according to the customers
belief
 marketing tactic
3 Price cues used to persuade
customer
Chapter- 4
Price Level
 Price
Setting
 Ultimate Intersection between Value
Creation & Value Extraction

Where to
Set
 Economic Theory At Equilibrium

Setting  Uncontrolled Pricing Rail/Bus Ticket

 Financial Managers Set High Price
the Price
 Marketing Managers Set Low Price

Often Politically
Charged,
How to Set Compromised,
Irrelevant

 To be Effective
 6 Steps
How To Make The
Price Effective?

Blending not Compromise

Consideration of Internal
Financial Constrains

Face External Conditions

Define 6 Steps
of Pricing!
1. Define a Identify Highest & Lowest
Viable Range Price Range

2. Make Skim The Market

Strategic
Penetrate the Market
Choices
Neutral Pricing

3. Assess Price↔ Volume ↔

Break Even Profitability

4. Gauge Price Follow Qualitative Judgement

Elasticity & Previous History
 5. Accounts for Reference Value
Psychological Factor Switching Cost
Difficult Comparison
Importance of end benefit
Price Quality Perception
Size of Expenditure
Shared Cost
Transection Value
Perceived Fairness

6. Communicate
Inform the Customers
New Price to about the New Price
Market
 Chapter-5
Price Competition
 Price Competition
As
Positive Sum Game/ Negative Sum Game

Market Share Myth

“Growing Market Share is The Key to Profitability”

Competitive By Luck
Advantage Moving first to new idea
Efficiently manage farm’s value chain

How to Need Based Positioning

Achieve
Competitive
Access Based Positioning
Advantage? Focus Based Positioning
 If the response cost less
than preventable sales
loss

If the cost of taking If the competitor be able

multiple steps less than Where to
and want to reduce price
avoidable sales loss React? to create gap

If the cost of response

justifiable against the
market risk
 STARTING
THE WAR

If enjoy cost- If Keep eggs If everyone

advantage competitors in different is in the
are not basket game
interested
Chapter 6: Challenges in
pricing
 Development

Product Introduction
Life cycle

Growth

Maturity

Decline
 Need establishment
cost

Development
Negative gain

No sell no profit
 Introducing new and Begin demand
previously unknown
product Positive
cash flow
Offer customers Early
adopters are
evaluators
Convincing
Imitators look for
Introduction customers
guidance
Reflecting and
Information
communicating unique
diffusion
value
Change purchase pattern
Challenge Overcome
Successful launch, eg Tesla
Influence
promoters (local Money
Price set Trial
back
retailers)
 Aligning value with price

Think value
Don’t give offer
less
More
customers
New
Reduce competitors
price
Many alternatives
Growth
Economies of scale in
production
Challenge Sales volume sets the
standard
Production >
Sales
Segment the market, eg- i phone
Overcome
charger
 Make choice to maintain
margin
Retain existing market
position

Loss loyal customers and

Critically compare
brand value

Initiating product Difficult product

design differentiation
Price High
sensitivity copycats

Challenge

Maturity
 Narrow profit margins

Sales drop
Decline

Buyers move on to other

products
 Unbundle / devide products
How to make profit?

Track retail sales data. eg-

educated, employed

Improve resource control and cost

utilization, eg-employee before eid

Expand product line, eg i phone

charger

Re-evaluate distribution channels,

eg- new branch near to customers
THANK YOU