Marketing management strategy Lecture 8

Lecture

Pricing Strategy

8

BMA351 Marketing Management

Pricing StrategyIs a key factor in producing revenue for the firm Is the easiest of all marketing variables to change Is an important consideration in competitive intelligence Is considered to be the only real means of differentiation in highly commoditized markets Is among the most complex decisions in the marketing plan© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The Role of Pricing in Marketing StrategyThe Seller’s Perspective on PricingPrice is about what the seller will accept in exchange for a product. Sellers consider four key issues:Costs Demand Customer value Competitors’ prices

The Buyer’s Perspective on PricingPrice is about what the buyer is willing to give up in exchange for a product. Buyers consider two key issues:Perceived value Price sensitivity© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

A Shift in the Balance of PowerA buyer’s market occurs when:Large number of sellers in the market Many substitutes for the product Economy is weak

A seller’s market occurs when:Products are in short supply Products are in high demand Economy is strong

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The Relationship Between Price and RevenueMyth #1 – When business is good, a price cut will capture greater market share. Myth #2 – When business is bad, a price cut will stimulate sales.

Price cutting is generally not in the best interests of the firm unless sales volume will increase. A better strategy is to build value into the product offering at the same (or even a higher) price.© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Key Issues in Pricing StrategyPricing Objectives Supply and Demand The Firm’s Cost Structure Competition and Industry StructurePerfect competition Monopolistic competition Oligopoly Monopoly

Stage of the Product Life Cycle© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Common Pricing Objectives (Exhibit 8.1)

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Pricing Strategy Over the Product Life Cycle (Exhibit 8.2)

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Pricing Service ProductsService pricing is critical because price may be the only cue to quality in advance of purchase.

Service pricing becomes more important and difficult when:Service quality is hard to detect prior to purchase Costs are difficult to determine Customers are unfamiliar with the service process Brand names are not well established Customers can perform the service themselves The service has poorly defined units of consumption Advertising within the service category is limited The total price of the service is difficult to state beforehand

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Service Pricing and Yield ManagementService pricing becomes a key issue in balancing supply and demand during peak and off-peak demand times. Yield management allows the firm to simultaneously control capacity and demand.Control capacity by limiting available capacity at certain price points Control demand through price changes and overbooking capacity

Yield management also allows service firms to segment markets based on price elasticity.© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Yield Management for a Hypothetical Hotel (Exhibit 8.3)

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Price Elasticity of DemandRefers to customers’ sensitivity to changes in price The relative impact on the demand for a product, given specific increases or decreases in the price charged for that productInelastic demand – Customers are not sensitive to price changes; demand remains relatively the same Elastic demand – Customers are sensitive to price changes; demand falls as the price increases Unitary demand – Change in price and demand offset, so total revenue remains the same

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Price Elasticity of Demand (Exhibit 8.4)

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Situations That Increase Price SensitivityAvailability of Product SubstitutesCustomers are more sensitive to price changes when they can choose among a number of substitute products.

Higher Total ExpenditureThe higher the total expense, the more elastic the demand.

Noticeable DifferencesProducts having heavily promoted prices tend to experience more elastic demand.

Easy Price ComparisonsCustomers are more price sensitive if they can shop around for a better price.© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or pos …… 此处隐藏：5819字，全部文档内容请下载后查看。喜欢就下载吧 ……