Pricing- Understanding & Capturing Customer Value
5 likes8,656 views
This document discusses pricing strategies and considerations. It defines price as the amount charged for a product or service. Major pricing strategies discussed include customer value-based pricing, cost-based pricing, good-value pricing, value-added pricing, competition-based pricing, and break-even analysis/target profit pricing. Internal factors like product costs and external factors like competitors' strategies also influence pricing decisions. The document outlines different pricing strategies companies use for new products, product mixes, and adjusting prices.
Pricing- Understanding & Capturing Customer Value
- 2. What is Price? Major Pricing Strategies Internal & External Consideration Affecting Price Decisions Outline
- 3. Price!!! The amount of money charged for a product or service; the sum of the values that customers exchange for the benefits of having or using the product or service.
- 4. Major Pricing Strategies Customer Value Based Pricing Setting price based on buyers’ perceptions of value rather than on the seller’s cost.
- 5. Price Ceiling No demand above this Price Competitors’ strategies and prices Marketing strategy, objectives, and mix Nature of the market and demand Price Floor No profit below this Price If customers perceive that a product’s price is greater than its value, they won’t buy it. If the company prices a product below its costs, profits will suffer. Between the two extremes, the “right“ pricing strategy is one that delivers both value to the customer and profits to the company. Other Internal and External Considerations Customer Perceptions Value Product Costs Major Pricing Strategies Customer Value Based Pricing
- 6. Major Pricing Strategies Design product to deliver desired value at target price Customer Value Based Pricing Cost Based Pricing Design a good product Determine product costs Set price based on cost Convince buyers of product’s value Assess customer needs and value perceptions Set target price to match customer perceived value Determine costs that can be incurred Value Based Pricing
- 7. Major Pricing Strategies Good-Value Pricing Offering the right combination of quality and good service at a fair price. Good-Value Pricing Every Day Low Pricing (EDLP) charging a constant, everyday low price with few or no temporary price discounts High-Low Pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items
- 8. Major Pricing Strategies Value-Added Pricing Attaching value-added features and services to differentiate a company’s offers and charging higher prices. Value-Added Pricing
- 9. Setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk. Major Pricing Strategies Cost Based Pricing
- 10. Major Pricing Strategies Cost Based Pricing Types of Costs: Costs that do not vary with production or sales level. Fixed Costs Costs that vary directly with the level of production. Variable Costs The sum of the fixed and variable costs for any given level of production. Total Costs
- 11. Major Pricing Strategies Cost Plus Pricing Adding a standard markup to the cost of the product. • Sellers are certain about costs Benefits • Ignore demands and competitor prices Disadvantages
- 12. Major Pricing Strategies Break-Even Analysis and Target Profit Pricing Setting price to break even on the costs of making and marketing a product or setting price to make a target return.
- 13. Setting prices based on competitors’ strategies, prices, costs, and market offerings. Major Pricing Strategies Competition Based Pricing
- 15. Pricing Strategies New Product Pricing Strategy Market-Skimming Pricing Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales. Market-Penetration Pricing Setting a low price for a new product to attract a large number of buyers and a large market share.
- 16. Pricing Strategies Product Mix Pricing Strategies Product Line Pricing Optional Product Pricing Captive Product Pricing By-Product Pricing Product Bundle Pricing
- 17. Pricing Strategies Price Adjustment Strategies Discount and Allowance Pricing Segmented Pricing Psychological Pricing Promotional Pricing Geographical Pricing Dynamic Pricing International Pricing
- 18. Other Internal and External Considerations Affecting Price Decisions Customers Perception of value set the upper limit for prices, and costs set the lower limit. Companies must consider all internal and external factors during setting prices.
- 19. Other Internal and External Considerations Affecting Price Decisions Target Costing starts with an ideal selling price based on consumer value considerations and then targets costs that will ensure that the price is met.
- 20. Other Internal and External Considerations Affecting Price Decisions
- 21. Other External Factors Other Internal and External Considerations Affecting Price Decisions
- 22. Our Team Zakiul Islam Sheikh Arif Akib Hasan Srabon Jahidul Islam SK Shahriar