Pricing and value

What is price?• the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service... Factors Leading to Less Price Sensitivity • Th

Presented by Khoa Nguyễn

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1 Price Definition

What is price?

• the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service.

Pricing in

Marketing 4.0

Synonyms for Price

2 Pricing Methods

Assess needs and

Setting Prices

V A L U E - B A S E D C O S T - B A S E D

Value-based pricing

• uses buyers’ perceptions of value, not sellers’ cost, as the key to pricing

Cost-based pricing

3 Steps in Setting Price

Steps in Setting Price

Price Elasticity of Demand

Factors

Leading to

Less Price

Sensitivity

• The product is more distinctive

• Buyers are less aware of substitutes

• Buyers cannot easily compare the quality of substitutes

• The expenditure is a smaller part of buyer’s total income

• The expenditure is small compared to the total cost of the end product

• Part of the cost is paid by another party

• The product is used with previously purchased assets

• The product is assumed to have high quality and prestige

• Buyers cannot store the product

Elasticity of demand

Elasticity

of demand

Elastic

Inelastic

Step 3: Estimating Costs

Types of Costs Target Costing

Types of

costs FIXED COSTS

VARIABLE COSTS

+

TOTAL COSTS

=

TARGET

COSTING

• TARGET COSTING: starts with an

ideal selling price based on

customer-value considerations, and then targets costs that will ensure that the price is met

Step 4:

Analyzing the market and

competitors

Market types

PURE COMPETITION

MONOPOLISTIC COMPETITION

OLIGOPOLISTIC COMPETITION

MONOPOLY

COMPETITORS

strategies

• Questions to ask:

• How does the company’s market

offering compare with competitors’ offerings in terms of customer value?

• How strong are current competitors and what are their current pricing

strategies?

• How does the competitive landscape influence customer price sensitivity?

Step 5: Selecting a Pricing Method

• Markup pricing

• Target-return pricing

• Perceived-value pricing

• Value pricing

Target-return pricing

Step 6:

Select the

final price

Impact of other marketing activities Company pricing

policies

Pricing considerations

• MARKETING STRATEGY AND

OBJECTIVES

Pricing

considerations

• ORGANIZATIONAL FACTORS

ECONOMIC CONDITIONS

Pricing considerations

• Recession

• Inflation

4 New Product Pricing

Strategies

New Product

strategies

PENETRATE SKIM

Skimming

Market-Pricing

Market-Penetration

Pricing strategy

5 Product Mix Pricing

Strategies

Captive product pricing

By-product pricing

Product bundle

pricing

Product line

pricing

Optional product pricing

Captive product pricing

By-product pricing

Product bundle

pricing

Product mix

pricing strategies

Product line

pricing

Optional product pricing

Captive product pricing

By-product pricing

Product bundle

pricing

Product mix

pricing strategies

Product line

pricing

Optional product pricing

Captive product pricing

By-product pricing

Ink-Product line

pricing

Optional product pricing

Captive product pricing

By-product pricing

Product line

pricing

Optional product pricing

Captive product pricing

By-product pricing

Other pricing strategies

❑ Discount (giảm giá)

• Cash discount

• Quantity discount

• Functional discount

• Seasonal discount

❑ Allowances (chiết khấu)

❑ Psychological pricing – neuromarketing

Key lesson

BRASSINGTON, F and PETTITT, S (2012) Essentials of

Marketing 3rd Ed Harlow: Pearson

KOTLER, P and ARMSTRONG, G (2013) Principles of

Marketing London: Prentice Hall