Lecture Basic Marketing: A global managerial approach - Chapter 17: Pricing objectives and policies

In this chapter you will: 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;...
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Lecture Basic Marketing: A global managerial approach - Chapter 17: Pricing objectives and policies Chapter 17:    Pricing Objectives and Policies For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited. Strategic Planning for Price Target Market Product Place Promotion Price Pricing objectives Geographic Discounts and Price levels terms— Price allowances— over product who pays flexibility to whom and life cycle transportation when and how Exhibit 17­1 17­2 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited. Pricing Objectives Target Return Profit Oriented Maximize Profits Dollar or Unit Sales Growth Pricing Sales Objectives Oriented Growth in Market Share Meeting Competition Status Quo Oriented Nonprice Competition Exhibit 17­4 17­3 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited. 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 17­4 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited. Price Level Policies Skimming Pricing Price Sell at high price before reducing to Initial next price level “Skim the cream”  skimming and repeat pricing involves   price selling at a high  price to those who  Second are willing to pay  price before aiming at  more price­sensitive  Final consumers. price Quantity 17­5 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited. Price Level Policies Penetration Pricing Price Whole market price Penetration pricing  involves selling the  whole market at  one low price. Quantity 17­6 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited. Discount Pricing Quantity Seasonal Discount Pricing Sale Cash Trade 17­7 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited. Allowances Advertising Allowance Stocking Common Kinds Allowance of Allowances Push Money Allowance Trade-In Allowance 17­8 ...