Hello!

Mr. Rayan C. Soriano, MC

Faculty Member
Department of Marketing
Management,
Open University System
Pricing Strategy Pricing Strategy Pricing Strategy Pricing Strategy

LESSON LESSON LESSON LESSON

1 2 3 4
Start Start Start Start
 Today’s lesson
 Pricing Policies and Price
Applied Marketing Expectations
 The Emergence of Strategic
LESSON Sourcing
 Policies for Price Negotiation

3  Policies for Promotional

Pricing
Start  The Price-Setting Process
 Communicating New Prices to
the Market
Pricing Policies
and Pricing
Expectations
 Pricing Policies and Pricing
Expectations
Pricing policies are the guidelines and principles that a business or organization
establishes to determine how it sets prices for its products or services. These
policies are a fundamental component of a company's pricing strategy and can
have a significant impact on its profitability, competitiveness, and customer
relationships.
"Pricing expectations" refers to the anticipated or expected prices that
customers, consumers, or businesses have for products or services. These
expectations can be influenced by various factors and play a crucial role in the
purchasing decisions of individuals and organizations.
 Pricing Policies and Pricing
Expectations
Pricing policies and price expectations are
closely intertwined in the world of business and
commerce. A company's pricing policies directly
influence how customers perceive its prices and,
in turn, affect customer behavior and buying
decisions.
 Here’s how the pricing policies relate
to and shape price expectations:
Customer Trust: Transparent and fair pricing policies contribute to customer
trust. When customers believe that a company's pricing is fair and consistent,
they are more likely to trust the company and continue doing business with it.

Price Perception: Pricing policies shape how customers perceive a company's

prices. For example, an "everyday low pricing" policy communicates that
prices are typically lower, leading customers to expect consistent low prices.
On the other hand, a company known for frequent sales and discounts may
condition customers to expect occasional price reductions.
 Here’s how the pricing policies relate
to and shape price expectations:
Segmented Pricing Policies: Companies with segmented pricing policies, such
as offering discounts to certain customer groups or during specific times, can
influence price expectations differently for different segments of their customer
base. Some customers may come to expect discounts, while others expect
premium prices for exclusive products or services.
Market Positioning: Pricing policies play a critical role in positioning a
company within its market. A company with a premium pricing policy will be
associated with higher quality and exclusivity, shaping customer price
expectations accordingly.
 Here’s how the pricing policies relate
to and shape price expectations:
Price Competition: Companies that adopt aggressive competitive pricing
policies may condition customers to expect lower prices due to the presence of
frequent price wars or discounts in the market.

Promotional Strategies: Pricing policies often dictate the use of promotional

strategies such as sales events, limited-time offers, or loyalty programs. These
promotions can temporarily shift price expectations and influence buying
behavior.
 Here’s how the pricing policies relate
to and shape price expectations:
Perceived Fairness: Pricing policies should align with customers' perceptions
of fairness. When pricing policies are perceived as unfair or inconsistent, it can
lead to dissatisfaction and negatively impact price expectations.

Pricing Communication: Companies must effectively communicate their

pricing policies to customers. Clear and transparent communication helps
customers understand how prices are determined and what to expect, reducing
the likelihood of surprises and confusion.
 Here’s how the pricing policies relate
to and shape price expectations:
Adaptation to Market Changes: Pricing policies should be adaptable to
changing market conditions. When companies can adjust their pricing policies
in response to economic fluctuations or shifts in customer demand, they can
help manage price expectations effectively.
A company's pricing policies have a direct impact on how customers
perceive its prices and what they expect to pay for its products or services.
Consistency, transparency, and alignment with value and market
positioning are essential aspects of pricing policies that can help shape and
manage customer price expectations. Companies that effectively manage
these expectations are more likely to build customer trust and loyalty
while optimizing their revenue and profitability.
The Emergence of
Strategic Sourcing
The emergence of strategic sourcing refers to the development and
adoption of a strategic approach to procurement and supply chain
management within organizations. It represents a fundamental shift in
how businesses view and manage their supplier relationships and
procurement processes.

Strategic sourcing is an approach to procurement and supply chain

management that has emerged and evolved in response to changing
business environments and market dynamics. It involves a deliberate and
systematic process of identifying, evaluating, and selecting suppliers to
optimize the procurement of goods and services for an organization
 Strategic sourcing is an approach to supply chain
management that formalizes the way information is
gathered and used so an organization can use its
consolidated purchasing power to find the best possible
values in the marketplace and align its purchasing
strategy to business goals.
Policies for Price
Negotiation
Price negotiation policies are guidelines and procedures
that organizations establish to govern the process of
negotiating prices with suppliers or customers. These
policies help ensure that price negotiations are
conducted fairly, consistently, and in alignment with the
organization's goals and objectives.
 Key policies that organizations may
consider for price negotiation:
Pricing Authority: Specify who within the organization has the authority to
negotiate prices. This may include procurement managers, sales
representatives, or designated negotiation teams.
Pricing Guidelines: Establish pricing guidelines or price bands that provide
negotiation boundaries for negotiators. These guidelines may include minimum
acceptable price levels, maximum allowable discounts, or target price ranges.
Pricing Approval Process: Outline the process for seeking and obtaining
approval for price concessions or deviations from standard pricing guidelines.
 Key policies that organizations may
consider for price negotiation:
Negotiation Strategies: Define negotiation strategies based on the type of
negotiation (e.g., with suppliers or customers). Specify whether the
organization aims to achieve cost reductions, maintain margins, or pursue other
strategic objectives.
Information Sharing: Determine the extent to which negotiators can share
pricing information with suppliers or customers. This policy should consider
confidentiality and competitive sensitivity.
Competitor Pricing: Specify how competitor pricing information is used in
negotiations. Organizations may use competitor pricing as a reference or
benchmark to support their negotiation positions.
 Key policies that organizations may
consider for price negotiation:
Discount Structures: Outline the organization's discount structure, including volume-
based discounts, loyalty discounts, or promotional discounts.
Payment Terms: Clarify payment terms, including credit periods, payment methods,
and any associated discounts or penalties for early or late payments.
Price Transparency: Communicate the organization's commitment to transparent
pricing practices. Ensure that pricing information provided to customers or suppliers is
accurate and accessible.
Customer Segmentation: Establish policies for different customer segments. This may
include premium pricing for high-value customers or negotiated pricing for key
accounts.
Effective price negotiation policies provide a framework
for achieving favorable outcomes while maintaining
transparency, compliance, and ethical standards. They
help organizations strike a balance between meeting
customer or supplier needs and achieving their financial
and strategic objectives.
 Price Negotiation Process
During price negotiation, there are two roles that arise:
buyer and seller. The purpose of price negotiation is to
discuss a price that is agreeable or acceptable to both parties.
Upon the end of the negotiation, either accept or lose the
deal.
 Policies for
Promotion Pricing
 Policies for Promotion Pricing
Promotion pricing policies are a set of guidelines and
procedures that organizations establish to govern the pricing
of products or services during promotional campaigns or
sales events. These policies help ensure that promotion
pricing is executed consistently, transparently, and in
alignment with the organization's marketing and financial
goals.
 Policies for Promotion Pricing
Effective promotion pricing policies help organizations
execute successful promotional campaigns while maintaining
transparency, compliance, and customer trust. They enable
businesses to strike a balance between meeting promotional
objectives and achieving financial and marketing goals.
The Price-Setting
Process
 The Price-Setting Process
The price-setting process is a critical aspect of a business's
overall pricing strategy. It involves determining the optimal
price at which to sell a product or service to achieve specific
business objectives, such as maximizing profit, gaining
market share, or ensuring price competitiveness
 The Price-Setting Process
Every organization faces a problem of setting the prices of
products. The main aim of marketing strategy of an
organization is to attain marketing objectives and satisfy the
targeted market.

The marketing decisions affect the prices of products to a

great extent.
The marketers follow various steps to
set prices
 The Price-Setting Process
1. Setting price objectives:
Refers to set the goals of the pricing policy. An organization can
have multiple pricing objectives.

2. Estimating the product demand:

Helps in knowing the factors that affect the demand of a product.
Some of the important factors can be the prices of products,
environmental factors, and income and expectations of
customers. There are three things that are studied by the
marketers for estimating the demand.
 The Price-Setting Process
3. Analyzing the competitor’s prices:
Influences the decisions of setting the prices of products. The
pricing strategies of competitors affect the demand of the
product and lead to a loss of market share. Thus, it is clear that
the marketers should be careful about the future competition.

4. Selecting the pricing method:

Involves the selection of a technique for setting the price. There
are various types of pricing methods used by organizations.
 The Price-Setting Process

5. Selecting the pricing policy:

Involves a strategy or practice used by an organization to achieve
its pricing objectives.
Communicating
New Prices to the
Market
 Communicating New Prices to the
Market
Effectively communicating new prices to the market is a crucial
aspect of implementing a pricing strategy. Whether you're
increasing, decreasing, or making other changes to your prices,
clear and strategic communication is essential to ensure that your
customers and stakeholders understand and accept the changes.
Communicating New Prices to the
Market
Effective communication of new prices is essential for
maintaining customer satisfaction, retaining loyal
customers, and successfully implementing your pricing
strategy. By being transparent, responsive, and customer-
focused, you can navigate price changes while
minimizing negative impacts on your customer
relationships.
 Step-by-step guide on how to
communicate new prices to the
market:
• Loyalty and Retention Programs:
• Internal Alignment
• Feedback Mechanisms:
• Customer Segmentation
• Transparency in Billing:
• Timing
• Training for Frontline Staff:
• Clear Communication
• Monitoring and Adaptation:
• Multichannel Approach
• Legal Compliance:
• Customer Education
• Consistency:
• Offer Alternatives:
• Follow-Up: