14

Developing Pricing Strategies and

Programs

Marketing Management
Canadian Fourteenth Edition
14 - 1
 Consumer Psychology
and Pricing
• Price-quality inferences
• Price endings
• Reference prices
– Buying a ticket to Toronto.

14- 2
Possible Consumer Reference
Prices
 Typical price  Competitor prices
 Last price paid  Expected future price
 Usual discounted
price

14- 3
 Pricing Objectives
(macro level)
•Marketing skimming
•Market penetration

14- 4
 Skimming vs. Penetration

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14- 5
PLC
How stages
of the PLC
relate to a
firm’s
marketing
objectives
and
marketing
mix actions

6
 Pricing Objectives
(macro level)

In what conditions market skimming/penetration work?

14- 7
 Pricing Objectives
(macro level)
•Marketing skimming

–Product quality and image must support the price.

–Buyers must want the product at the price.
–Costs of producing the product in small volume
should not cancel the advantage of higher prices.
–Competitors should not be able to enter the market
easily.

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14- 8
 Pricing Objectives
(macro level)
•Marketing penetration

– Price sensitive market

– Inverse relationship of production and distribution
cost to sales growth
– Low prices must keep competition out of the market

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14- 9
 Pricing Methods
• Markup pricing
• Target-return pricing
• Perceived-value pricing
• Value pricing
– EDLP, High Low pricing

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14- 10
 Table 14.6 Profits Before and
After a Price Increase

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14- 11
 Promotional Pricing Tactics
• Loss-leader pricing
• Special-event pricing
• Cash rebates
• Low-interest financing
• Longer payment terms
• Psychological discounting

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14- 12
 Illegal pricing practices
 Price fixing
 Predatory pricing
 False ordinary selling prices
 Bait and switch

 Competition Bureau of Canada

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14- 13
 Pricing and ethics

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14- 14
 Root Candles
Pricing Decision Case

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14- 15
 Root Candles
Pricing Decision Case
-What external factors can affect pricing decisions?

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14- 16