Lectures "Marketing management - Chapter 14: Developing pricing strategies and programs" provides students with the knowledge: Understanding pricing, setting the price, price adaptation strategies, initiating and responding to price changes. Invite you to refer to the disclosures.
CHAPTER 14 DEVELOPING PRICING STRATEGIES AND PROGRAMS Nguyen Tien Dung, MBA Email: dung.nguyentien3@hust.edu.vn Chapter Questions How consumers process and evaluate prices? How should a company set prices initially for products or services? How should a company adapt prices to meet varying circumstances and opportunities? When should a company initiate a price change? How should a company respond to a competitor’s price change? © Nguyễn Tiến Dũng Main Contents Understanding Pricing Setting the Price Price-Adaptation Strategies Initiating and Responding to Price Changes © Nguyễn Tiến Dũng Understanding Pricing ● Names of Price ● A Changing Pricing Environment ● How Companies Price ● Consumer Psychology and Pricing © Nguyễn Tiến Dũng Synonyms for Price ● Rent ● Special assessment ● Tuition ● Bribe ● Fee ● Dues ● Fare ● Salary ● Rate ● Commission ● Toll ● Wage ● Premium ● Tax ● Honorarium © Nguyễn Tiến Dũng Common Pricing Mistakes ● Determine costs and take traditional industry margins ● Failure to revise price to capitalize on market changes ● Setting price independently of the rest of the marketing mix ● Failure to vary price by product item, market segment, distribution channels, and purchase occasion © Nguyễn Tiến Dũng Consumer Psychology and Pricing ● Reference prices ● Price-quality inferences ● Price endings ● Price cues © Nguyễn Tiến Dũng © Nguyễn Tiến Dũng Table 14.2 Consumer Perceptions vs Reality for Cars Overvalued Brands ● Land Rover ● Kia ● Volkswagen ● Volvo ● Mercedes © Nguyễn Tiến Dũng Undervalued Brands ● Mercury ● Infiniti ● Buick ● Lincoln ● Chrysler Price Cues ● “Left to right” pricing ($299 vs $300) ● Odd number discount perceptions ● Even number value perceptions ● Ending prices with or ● “Sale” written next to price © Nguyễn Tiến Dũng 10 Mark-up Pricing © Nguyễn Tiến Dũng 20 Target-Return Pricing © Nguyễn Tiến Dũng 21 Break-even Analysis © Nguyễn Tiến Dũng 22 Value-Based Pricing © Nguyễn Tiến Dũng 23 © Nguyễn Tiến Dũng 24 Auction-Type Pricing ● English auctions ● Dutch auctions ● Sealed-bid auctions © Nguyễn Tiến Dũng 25 Step 6: Selecting the Final Price ● Impact of other marketing activities ● Company pricing policies ● Gain-and-risk sharing pricing ● Impact of price on other parties © Nguyễn Tiến Dũng 26 Price-Adaptation Strategies ● Geographical pricing ● Discounts/allowances ● Promotional pricing ● Differentiated pricing © Nguyễn Tiến Dũng 27 Price-Adaptation Strategies Countertrade ● Barter ● Compensation deal ● Buyback arrangement ● Offset © Nguyễn Tiến Dũng Discounts/ Allowances ● Cash discount ● Quantity discount ● Functional discount ● Seasonal discount ● Allowance 28 © Nguyễn Tiến Dũng 29 Promotional Pricing Tactics ● Loss-leader pricing ● Special-event pricing ● Cash rebates ● Low-interest financing ● Longer payment terms ● Warranties and service contracts ● Psychological discounting © Nguyễn Tiến Dũng 30 Differentiated Pricing ● Customer-segment pricing ● Product-form pricing ● Image pricing ● Channel pricing ● Location pricing ● Time pricing ● Yield pricing © Nguyễn Tiến Dũng 31 Increasing Prices ● Delayed quotation pricing ● Escalator clauses ● Unbundling ● Reduction of discounts © Nguyễn Tiến Dũng 32 Brand Leader Responses to Competitive Price Cuts ● Maintain price ● Maintain price and add value ● Reduce price ● Increase price and improve quality ● Launch a low-price fighter line © Nguyễn Tiến Dũng 33 Initiating and Responding to Price Changes ● Initiating Price Cuts ● Initiating Price Increases ● Responding to Competitors’ Price Changes © Nguyễn Tiến Dũng 34 ... Nguyễn Tiến Dũng 19 Mark-up Pricing © Nguyễn Tiến Dũng 20 Target-Return Pricing © Nguyễn Tiến Dũng 21 Break-even Analysis © Nguyễn Tiến Dũng 22 Value-Based Pricing © Nguyễn Tiến Dũng 23 © Nguyễn Tiến. .. Curve © Nguyễn Tiến Dũng 18 Step 5: Selecting a Pricing Method ● Markup pricing ● Target-return pricing ● Perceived-value pricing ● Value pricing ● Going-rate pricing ● Auction-type pricing © Nguyễn. .. Psychology and Pricing ● Reference prices ● Price-quality inferences ● Price endings ● Price cues © Nguyễn Tiến Dũng © Nguyễn Tiến Dũng Table 14. 2 Consumer Perceptions vs Reality for Cars Overvalued