Chapter 15-Designing Pricing Strategies and programs(ppt 12)

Objectives
Setting the Price
Adapting the Price
Initiating & Responding to Price Changes
Price - Quality Strategies

Pricing Methods
Markup Pricing
Target Return Pricing
Perceived Value Pricing
Value Pricing
Going-Rate Pricing
Sealed-Bid Pricing
Some important pricing definitions
Utility: The attribute that makes it capable of want satisfaction
Value: The worth in terms of other products
Price: The monetary medium of exchange.
Value Example: Caterpillar
Tractor is $100,000 vs. Market $90,000
$90,000 if equal
7,000 extra durable
6,000 reliability
5,000 service
2,000 warranty
$110,000 in benefits - $10,000 discount!
Promotional Pricing
Loss-leader pricing
Special-event pricing
Cash rebates
Low-interest financing
Longer payment terms
Warranties & service contracts
Psychological discounting

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