08. pricing strategy

THARAKA DIASMBA(USA), BBA(USA), Dip in Mgt, ACIM(UK),

FAEA(Dip in AEA-UK), FinstSMM(UK), CPM(Asia),

MSLIM

1. Number of potential buyers; their age,

gender and education

2. Location of potential buyers

3. Position of potential buyers

4. Expected consumption of potential buyers

5. Economic strength of potential buyers

2AOT - www.tharakadias.com

1. Will potential buyers use price as an indicatorof quality?

2. Will potential buyers be favorably attracted byodd pricing?

3. Would potential buyers perceive price as toohigh relative to the service product gives?

4. Are potential buyers prestige oriented andwilling to pay a premium to fill this need?

5. How much will potential buyers be willing topay for the product?


1. Pricing to achieve a target return on

investment

2. Stabilization of price and margin

3. Pricing to achieve a target market share

4. Pricing to meet or prevent

competition


� Markup pricing – percentage is added to the

retailer’s invoice to determine final price

� Cost-plus pricing – costs of producing a � Cost-plus pricing – costs of producing a

product plus desired profit are added to

achieve price

� Rate-of-return or target pricing – price is

determined by adding desired rate of return

on investment to total costs


1. Perishability – must be priced to sell without costly delays; includes fruit to high fashion

2. Distinctiveness – homogeneous goods have easy substitutes and make distinguishing easy substitutes and make distinguishing between competitors difficult

3. Life Cycle –

• Skimming policy is when seller charges a high price on a new product.

• Penetration policy is when producer charges a low price for a new product.


Factors Affecting PriceFactors Affecting PriceFactors Affecting PriceFactors Affecting Price

Organizational

and Marketing

Objectives

PricingPricing

Decisions



Organizational

and Marketing

Objectives

Types of

Pricing

Objectives

Pricing

Decisions



Organizational

and Marketing

Objectives

Types of

Pricing

Objectives

Costs

Pricing

Decisions



Organizational

and Marketing

Objectives

Types of

Pricing

Objectives

CostsOther Marketing

Mix Variables

Pricing

Decisions



Organizational

and Marketing

Objectives

Types of

Pricing

Objectives


Mix Variables

Channel

Member

Expectations

Pricing

Decisions



Organizational

and Marketing

Objectives

Types of

Pricing

Objectives


Mix Variables

Customers'

Interpretation

and Response

Channel

Member

Expectations

Pricing

Decisions


• Internal Reference Price

• External Reference Price

• Value-Conscious• Value-Conscious

• Price-Conscious

• Prestige-Sensitive



Organizational

and Marketing

Objectives

Types of

Pricing

Objectives


Mix Variables

Channel

Member

Expectations

Competition

Pricing

Decisions

Customers'

Interpretation

and Response



Organizational

and Marketing

Objectives

Types of

Pricing

Objectives


Mix Variables

Channel

Member

Expectations

Competition

Legal and

Regulatory

Issues

Pricing

Decisions

Customers'

Interpretation

and Response


1. Number of competitors

2. Size of competitors

3. Location of competitors

4. Conditions of entry into the industry

5. Number of products sold by competitors

6. Cost structure of competitors

7. Historical reaction of competitors to pricechanges


Thank you

Thank you


Business

08. pricing strategy