Pricing and value

Presented by Khoa Nguyễn


Story of the day


Topic Outline

1. Price Definition – antidumping
2. Pricing Methods –
equilibrium point
3. Pricing Considerations
4. New Product Price
Strategies
5. Product Mix Price Strategies


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

Pricing in Marketing 4.0

1
Get instant price
comparisons
from thousands
of vendors.

2
Check prices at
the point of
purchase

3

4

Name their price
and have it met

Get products free


Synonyms for Price
•
•
•
•
•
•

•

Tuition
Fee
Fare
Rate
Toll
Premium
Rent

•
•
•
•
•
•
•

Special assessment
Bribe
Dues
Salary
Commission
Wage
Tax


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


2. Pricing Methods


Setting Prices
VA L U E - B A S E D

COST-BASED

Assess needs and
value perceptions

Design a product

Set target price

Determine costs

Determine costs

Set price based on cost

Design a product

Convince buyers of the
value


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


Survival

Step 1:
Selecting
the Pricing
Objective

Maximum current profit
Maximum market share

Maximum market skimming
Product-quality leadership


Price Sensitivity
Step 2:
Determining
Demand

Estimating Demand
Curves
Price Elasticity of
Demand


• The product is more distinctive
• Buyers are less aware of substitutes

Factors
Leading to
Less Price
Sensitivity

• 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