MKT 571 Week 4 Tapping The Global Market PPT!!
Determine Pricing Strategies
Consumers often actively process price information, interpreting it from the context of prior purchasing experience, formal communications ( advertising, sales calls, and brochures), informal communications ( friends, colleagues, or family members). How consumers perceive prices and what they consider the current actual price to be (Kotler & Keller, 2012).
Reference prices compare an observed price to an internal reference price they remember or an external frame of reference such as a posted regular retail price (Kotler & Keller, 2012).
PRICE- QUALITY INFERENCES Many consumers use price as an indicator of quality. Higher- priced cars are perceived to possess high quality (Kotler & Keller, 2012).
PRICE ENDINGS Many sellers believe prices should end in an odd number. Customers see an item priced at $ 299 as being in the $ 200 rather than the $ 300 range (Kotler & Keller, 2012).
Selecting the pricing objective
Survival – prices cover variable costs and some fixed costs, the company stays in business (Kotler & Keller, 2012).
Maximum Current Profit – Many companies try to set a price that will maximize current profits (Kotler & Keller, 2012).
Maximum Market Share – Higher sales volume will lead to lower unit costs and higher long- run profit. Set the lowest price, assuming the market is price sensitive (Kotler & Keller, 2012).
Maximum Market Skimming – setting high prices to maximize market skimming, prices start high and slowly drop over time (Kotler & Keller, 2012).
Product-Quality Leadership – product- quality leader in the market (Kotler & Keller, 2012).
Price Sensitivity – reactions of many individuals with different price sensitivities (Kotler & Keller, 2012).
Demand sets a ceiling on the price the company can charge for its product. Costs set the floor (Kotler & Keller, 2012).
Types of Cost and levels of production – costs take two forms, fixed and variable (Kotler & Keller, 2012).
Target Costing – Costs change with production scale and experience (Kotler & Keller, 2012).
Analyzing Competitors Costs, Prices, and Offers
Firms must take competitors’ costs, prices, and possible price reactions into account (Kotler & Keller, 2012).
Selecting a Pricing Method
Target-Return Pricing – Firms determine the price that yields its target rate of return on investment (Kotler & Keller, 2012).
Perceived-Value Pricing – Perceived value is made up of a host of inputs, such as the buyer’s image of the product performance, the channel deliverables, the warranty quality, customer support, and softer attributes such as the supplier’s reputation, trustworthiness, and esteem (Kotler & Keller, 2012).
Value Pricing – is a matter of reengineering the company’s operations to become a low- cost producer without sacrificing quality, to attract a large number of value-conscious customers (Kotler & Keller, 2012).
Selecting the Final Price
Final price is based on all of the other steps within setting the price as well as the following:
IMPACT OF OTHER MARKETING ACTIVITIES
COMPANY PRICING POLICIES
GAIN- AND- RISK- SHARING PRICING
IMPACT OF PRICE ON OTHER PARTIES