Copyright © 2009 Pearson Education, Inc.. Publishing as Prentice Hall• How should a company respond to a competitor’s price challenge?... Copyright © 2009 Pearson Education, Inc.. Publi
Trang 1Developing Pricing Strategies and Programs
Marketing Management, 13th ed
14
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• How should a company respond to a
competitor’s price challenge?
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Common Pricing Mistakes
• Determine costs and take traditional industry margins
• Failure to revise price to capitalize on market changes
• Setting price independently of the rest of the marketing mix
• Failure to vary price by product item, market segment, distribution channels, and purchase occasion
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• Usual discounted price
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Table 14.2 Consumer Perceptions vs
Reality for Cars
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Price Cues
• “Left to right” pricing ($299 vs $300)
• Odd number discount perceptions
• Even number value perceptions
• Ending prices with 0 or 5
• “Sale” written next to price
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When to Use Price Cues
• Customers purchase item infrequently
• Customers are new
• Product designs vary over time
• Prices vary seasonally
• Quality or sizes vary across stores
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Steps in Setting Price
• Select the price objective
• Determine demand
• Estimate costs
• Analyze competitor price mix
• Select pricing method
• Select final price
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Step 1: Selecting the Pricing Objective
• Survival
• Maximum current profit
• Maximum market share
• Maximum market skimming
• Product-quality leadership
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Step 2: Determining Demand
• Price sensitivity
• Estimate demand curves
• Price elasticity of demand
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Table 14.3 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
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Step 6: Selecting the Final Price
• Impact of other marketing activities
• Company pricing policies
• Gain-and-risk sharing pricing
• Impact of price on other parties
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• Longer payment terms
• Warranties and service contracts
• Psychological discounting
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Brand Leader Responses to
Competitive Price Cuts
• Maintain price
• Maintain price and add value
• Reduce price
• Increase price and improve quality
• Launch a low-price fighter line