Professional Documents
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Chapter 9
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First Stop
Trader Joes Price Value Equation
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What Is a Price?
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Product costs:
No
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Cost-based pricing:
Setting
Competition-based pricing:
Setting
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Types
of value-based pricing:
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Cost-Based Pricing
Cost-based pricing:
Costs
Types of costs:
Fixed
costs:
costs:
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Cost-Based Pricing
(markup) pricing:
pricing.
Target return pricing.
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Competition-Based Pricing
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Internal factors:
Overall
External factors:
The
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Other
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Organizational considerations:
Must
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the price-demand
relationship:
Different prices result in different levels of
demand, as shown by the demand curve.
Price
elasticity of demand:
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The economy:
Economic
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Setting a high
price for a new
product to skim
revenues layerby-layer from
those willing to
pay the high price.
Company
makes
fewer, but more
profitable sales.
Products
quality and
image must support its
higher price.
Costs of low volume
cannot be so high they
cancel out the benefit of
higher price.
Competitors should not
be able to enter market
easily and undercut
price.
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a low initial
price in order to
penetrate the
market quickly and
deeply.
Can attract a large
number of buyers
quickly and win a
large market share.
Market
Product-line pricing:
Setting
Optional-product pricing:
Pricing
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Captive-product pricing:
Pricing
By-product pricing:
Pricing
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Discounts:
Cash
Allowances:
Quantity
Trade-in
Promotional
Functional
Seasonal
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Segmented pricing:
Selling
Types:
1.
2.
3.
4.
Customer-segment.
Product-form.
Location-based pricing.
Time-based pricing.
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Psychological pricing:
Considers
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Promotional pricing:
Discounts (loss
leaders)
Special-event pricing
Cash rebates
Low-interest
financing
Longer warranties
Free maintenance
Geographical
pricing:
FOB-origin pricing
Uniform-delivered
pricing
Zone pricing
Basing-point pricing
Freight-absorption
pricing
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Dynamic pricing:
Adjusting
International pricing:
Adjusting
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conditions.
Competitive situations.
Laws and regulations.
Development of the wholesaling and retailing
system.
Consumer perceptions and preferences.
Different marketing objectives.
Costs.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall
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Price Changes
capacity.
Falling demand in face of strong competitive
price or a weakened economy.
Attempt to dominate market through lower
costs.
inflation.
Overdemand.
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fixing.
Predatory pricing.
discrimination.
Retail price maintenance.
Deceptive pricing.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall
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