Слайд 1Marketing II / Session 5
14.04.2015
Martin Samek
martin.samek@lbs.ac.at
Слайд 3Price
Marketing II/ Session 5
Слайд 4Price
Marketing II / Session 5
- is relative to competition
and the economy
- is a message about quality
is a
signal regarding positioning and image of the brand
- provides value for money/ cost benefit
Easiest to change of the 4 Ps
Слайд 5Price
Marketing II / Session 5
The 3 Cs influencing pricing
decisions
-> Company’s cost
-> Customers’ sense of product’s value
->
Competition’s price
Слайд 6Pricing Strategies
Marketing II / Session 5
LOW PRICE:
-> Nearly predatory
(Wal-Mart…)
-> Market penetration (Clever…
-> Loss leader (Happy Hour, Cell Phones…)
->
Cost-plus (Primark…)
Слайд 7Pricing Strategies
Marketing II / Session 5
MEDIUM PRICE:
-> Competitive (Best
Western)
-> Slightly below competition (
-> Slightly above competition
Слайд 8Pricing Strategies
Marketing II / Session 5
HIGH PRICE:
-> Market Skimming
->
Prestige or status pricing
-> High because of real market difference
Слайд 9Pricing
Marketing II / Session 5
Low price:
- How do we
determine whether costs are covered?
- Are low prices a
strategic choice or should we offer price fluctuations?
Слайд 10Pricing
Marketing II / Session 5
Low price:
How do we
determine whether costs are covered?
Are low prices a
strategic choice or should we offer price fluctuations?
Cost is the limiting factor
- If variable costs are high – maximize margins per unit
- If fixed costs are high – Maximize number of units sold (to disperse the cost per unit)
Cost-plus pricing: P = (unit cost) / (1-X%)
Слайд 11Pricing
Marketing II / Session 5
Low price:
Break Even?
->Number of units
needed to sell to cover costs
BE = fixed costs/(price-variable costs)
BE
is calculated for different price scenarios
Слайд 12Pricing
Marketing II / Session 5
Higher price:
Price Sensitivity
PS Price Sensitivity
P1
New Price (Lower Price)
P2 New Price (Higher Price)
Слайд 13Pricing
Marketing II / Session 5
Higher price:
Two unknown variables
PS
and
% change in sales
PS:
->Past data/experience
->Scanner Data
-> Survey Data
(WTP )
-> Conjoint Analysis
Слайд 14Pricing
Marketing II / Session 5
Profit maximization:
Profit = revenue –
expense
Revenue = price x quantity sold
To maximize profits, find a
price where any further increase in price would lead to a large falloff in quantity sold
Profit Maximization: marginal revenue equals marginal cost
Слайд 15Pricing Temporary Adjustments
Marketing II / Session 5
Слайд 16Pricing Temporary Adjustments
Marketing II / Session 5
Слайд 17Pricing Temporary Adjustments
Marketing II / Session 5