Chapter 08 pricing products pricing considerations, approaches, and strategy

Marketing for Hospitality and Tourism

CHAPTER 8:
PRICING PRODUCTS: PRICING CONSIDERATIONS, APPROACHES, AND
STRATEGY


Marketing for Hospitality and Tourism
• Editor’s name: Philip T. Kotler, John T. Bowen,
James Makens

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Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

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Learning objectives

• Outline the internal factors affecting pricing decisions,
especially marketing objectives, marketing mix strategy,
costs, and organizational considerations.
• Identify and define the external factors affecting pricing
decisions, including the effects of the market and
demand, competition, and other environmental elements.

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Chapter 08: Pricing Products: Pricing

considerations, approaches, and strategy

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Learning objectives

• Contrast the differences in general pricing approaches,
and be able to distinguish among cost-plus, target profit
pricing, value-based pricing, and going rate.

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Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

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Learning objectives

• Identify the new product pricing strategies of marketskimming pricing and market-penetration pricing.
• Understand how to apply pricing strategies for existing
products, such as price bundling and price adjustment
strategies.

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Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

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Learning objectives

• Understand and be able to implement a revenue
management system.
• Discuss the key issues related to price changes,
including initiating price cuts and price increases, buyer
and competitor reactions to price changes.

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Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

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8.1. Price
Simply defined:
Price is the amount of money charged for a
product or service
Broadly defined:
Price is the sum of values consumers
exchange for the benefits of having or using
the product or service
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Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

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Common Pricing Mistakes

Is Too CostOriented
Does Not
Account for
the Marketing
Mix

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Mistakes
Include
Pricing That:

Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

Fails to
Reflect
Market
Changes

Is Not Varied
Enough

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8.2. Factors to Consider When Setting
Prices

Internal
Factors

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Factors
that
Affect
Pricing
Decisions

Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

External
Factors

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Internal Factors
•
•

•
•

Cost
Marketing objective
Marketing mix strategies
Organizational Consideration

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Marketing Objectives

Survival

ProductQuality
Quality
Leadership

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Current Profit
Maximization
Maximization

Market-Share
Market-Share
Leadership
Leadership

Other
Other
Objectives
Objectives

Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

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External Factors

The Nature of
Market & Demand

Consumer
Perceptions
of Price &
Value

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Competition

Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

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Price-Demand Relationship
Figure 1.1. Two hypothetical demand schedules

Source: Kotler, Philip, et al., (2013), Marketing for hospitality and tourism 6ed, Pearson Education, page 322.

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Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

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Determinants of Price Elasticity

The Product
is Unique

Buyers are
Less Price
Sensitive
When:

The Product is
High in
Quality,
Prestige or
Exclusiveness

Substitute
Products are
Hard to Find

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Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

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Factors Affecting Price Sensitivity

Unique Value
Effect

End-Benefit
Effect

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Substitute
Awareness
Effect

Total
Expenditure
Effect

Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

Business
Expenditure
Effect

Price Quality
Effect

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8.4. Approaches to Pricing
Break-Even
Cost-Base
Pricing

Giá bán = cost + markup price

Value-Based
Pricing

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Pricing

Định
Định giá
giá dựa

dựa trên
trên điểm
điểm hòa
hòa
vốn,
vốn, nâng
nâng cấp
cấp hơn
hơn của
của CBP.
CBP.
Revenue
Revenue =
= Cost
Cost
Dựa
trên
quantity
Dựa trên quantity (Q)
(Q) để
để xác
xác
định
mức
tối
thiếu
sl
sp
cần
định mức tối thiếu sl sp cần

bán
bán ra
ra
Q
Q=
= fixed
fixed cost/variables
cost/variables cost
cost ––
đơn
đơn giá
giá sp
sp

CompetitionBased Pricing

Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

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8.4. New Product Pricing Strategies

Prestige
Pricing

MarketPenetration
Pricing

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MarketSkimming
Pricing

Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

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Existing Product Pricing Strategies

ProductBundle
Pricing

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Existing
Product
Pricing
Strategies

Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

PriceAdjustment
Strategies

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Price-Adjustment Strategies

Discount
Discount Pricing
Pricing
and
and Allowances
Allowances

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Discriminatory
Discriminatory
Pricing
Pricing

Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

Revenue
Revenue
Management
Management

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Psychological Pricing

Promotional
Pricing

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Psychologic
al Pricing

Chapter 08: Pricing Products: Pricing
considerations, approaches, and strategy

Value
Pricing

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