When you finish this chapter, you should: Understand how pricing objectives should guide strategic planning for pricing decisions; understand choices the marketing manager must make about price flexibility and price levels over the product life cycle; understand the many possible variations of a price structure, including discounts, allowances, and who pays transportation costs.
Trang 1For use only with Perreault and McCarthy texts.
Chapter 17:
Pricing Objectives
and Policies
Trang 2Chapter 17 Objectives
1 Understand how pricing objectives
should guide strategy planning for
pricing decisions.
2 Understand choices the marketing
manager must make about price
flexibility.
3 Know what a marketing manager
should consider when setting the
price level for a product in the
early stages of the product life
cycle.
4 Understand the many possible
variations of a price structure
including discounts, allowances,
and who pays transportation
costs.
5 Understand the value pricing
concept and its role in obtaining a competitive advantage and offering target customers superior value.
6 Understand the legality of price
level and price flexibility policies.
7 Understand the important new
terms.
Trang 3For use only with Perreault and McCarthy texts.
Strategy Planning for Price
Exhibit 171
Pricing objectives
Target Market
Price
Promotion Place
Product
Geographic term — who pays transportation and how
Discounts and allowances—
to whom and when
Price levels over product life cycle Price
flexibility
Trang 4Pricing Objectives
Exhibit 174
Dollar or Unit Sales Growth
Growth in Market Share
Target Return
Maximize Profits
Meeting Competition
Nonprice Competition
Pricing
Profit Oriented
Status Quo Oriented
Trang 5For use only with Perreault and McCarthy texts.
Price Flexibility Policies
Oneprice policy
The same price to all customers who purchase products under essentially the same conditions and quantities
Exchange rate changes may make this difficult in international markets
Flexible pricing (e.g., in channels, business
markets, expensive consumer shopping products)
Issues:
Use is increasing because of impact of information technology, customer databases, scanners, etc.
Selling costs may be higher if prices are negotiated
“Signals” to competitors
Customer dissatisfaction may be a problem
“Gray channels” and crossshipping
Trang 6Price Level Policies
“Skim the cream”
pricing involves selling at a high price to those who are willing to pay before aiming at more pricesensitive
consumers.
Price
Quantity
Initial
skimming
price
Second
price
Final
price
Skimming Pricing
Sell at high price before reducing to next price level and repeat
Trang 7For use only with Perreault and McCarthy texts.
Price
Quantity
Penetration Pricing
Whole market price
Penetration pricing involves selling the whole market at one low price.
Exhibit 175B
Price Level Policies
Trang 8Quantity Seasonal
Discount Pricing
Discount Pricing
Trang 9For use only with Perreault and McCarthy texts.
Allowances
Common Kinds
of Allowances
Advertising Allowance
Push Money Allowance
Trade-In Allowance Stocking Allowance
Trang 10Geographic Pricing Policies
Common
Geographic
Pricing Policies
F.O.B.
Uniform Delivered
Freight Absorption
Zone
Trang 11For use only with Perreault and McCarthy texts.
Value Pricing
Fits with Strategy
Planning
Fits with Strategy
Planning
Target Market and Competition
Target Market and Competition
Focus on Customer Requirements
Focus on Customer Requirements
????
????
????
????
????$
Trang 12Discounts Quantity Cumulative Noncumulative Seasonal
Net Cash Discounts 2/10 Net 30 Trade (Functional) Discounts
Sale Price Everyday Low Pricing Allowances
Advertising Stocking Push Money Trade-in
Coupons
Price
Target Return
Objective
Profit Maximization
Objective
Sales-Oriented
Objective
Status Quo Objectives
Nonprice Competition
Administered Price
One-Price Policy
Flexible-Price Policy
Skimming Price Policy
Penetration Pricing
Policy
Introductory Price
Dealing
Basic List Prices
Rebates F.O.B.
Zone Pricing Uniform Delivered Freight Absorption Value Pricing
Unfair Trade Practices Act
Dumping Phony List Prices Wheeler Lea Act Price Fixing
Robinson-Patman Act Price Discrimination
Key Terms