STRATEGIC PRICING

4 KEY ELEMENTS

• What are the 4 key elements of marketing?
• The first three are value creation. It sows the seeds of business success.
• What sets pricing apart from the first three elements?

APPLE MUSIC

• How did apple quickly went from nothing, to market leadership in music sales?
• Yet its changing yet again with subscription based streaming services.

GOVERNMENT USE OF STRATEGIC PRICING

• In Singapore, London and Tokyo they use strategic pricing to raise revenues.
• How about the Philippines?

LEVERAGING PROFIT INTO SUSTAINABLE GROWTH

• ___is the amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise.
• ___ is a financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

LEVERAGING PROFIT INTO SUSTAINABLE GROWTH

• ___ represents the percentage of an industry, or a market's total sales, that is earned by a particular company over a specified time period.
• ___ Market size refers to the maximum total number of sales or customers your business can see, often measured over the course of a year.

COST PLUS PRICING

• involves adding a markup to the cost of goods and services to arrive at a selling price.
• Q - What is the problem with CPP?

CUSTOMER DRIVEN PRICING

• is the practice of setting prices according to customers' perceived value of a company's goods or services.

Q - __________PRICING

• Pricing aggressively to increase control over the market share for products and services.

_____________ requires making informed trade-offs between price and volume in order to make profit.

_____________ what is the objective of Strategic Pricing?

QUESTION

• ______ is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price when nothing but the price changes.

There is no surefire way of achieving sustainable profitability.

_____ means that differences in pricing across customers or applications reflect differences in the value to customers

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• _______ means that companies anticipate disruptive events and develop strategies in advance to deal with them.
• ______ means that the company evaluates its success at price management by what it earns relative to alternative investments rather than by its market share and growth relative to its competitors.

Value Creation

• It is often asserted as a truism that the value of something is whatever someone will pay for it.
• People sometimes pay for the things that soon disappoint them in use.

PEOPLE ARE ALSO RELUCTANT TO PAY ANY PRICE FOR RADICAL NEW INNOVATIONS SIMPLY BECAUSE THEY LACK THE EXPERIENCE, EITHER THEIR OWN OR THAT OF SOMEONE ELSE WHOSE JUDGEMENT THEY TRUST, FROM WHICH TO JUDGE THE VALUE THAT THE INNOVATION COULD BRING TO THEIR LIVES

VALUE COMMUNICATION

• Understanding the _____ of your products create for customers can still result in poor sales unless customers recognize the value they are obtaining.

VALUE COMMUNICATION

• Buyers use mental shortcuts when making decisions, often by looking for analogous products to evaluate relative value.
• Ex. Drinks in the cinemas
• Ex. $30 wine in a high end restaurant.

VALUE COMMUNICATION

• Marketers might employ traditional advertising media to convey their differential value.
• Name 3 traditional advertising media.

PRICE STRUCTURE

• You now understand how value is created and can be communicated for different customer segments, the next choice required for a pricing strategy is to select a way to monetize that value into revenue.
• What do you call the output of this process?

PRICE STRUCTURE

• Why does airlines prices differ from time, day etc.
• Gas stations in the Philippines

FORD MUSTANG

• What did ford do to achieve the success they have with the Mustang
• What was the base price of the mustang during its launch in 1964

PRICING POLICY

• 3 common conclusion for price resistance:
• A.
• B.
• C.

________ refers to rules or habits, either explicit or cultural, that determine how a company varies its prices when faced with factors other than value and cost to serve that threaten its ability to achieve its objective.

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• According to economic theory, setting prices is a straightforward exercise in which the marketer simply sets the price at the point on the demand curve where marginal revenues are equal to the marginal costs.
• True or false?

PRICE SETTING

• As any experienced pricer knows, setting prices is seldom so simple. On the one hand, it is impossible to predict how revenues will change following a price change because of the uncertainty about how customers and competitors will respond.

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• THE FINAL SET OF STRATEGIC PRICING CHOICES THAT MANAGERS MUST MAKE TO MAXIMIZE GROWTH PROFITABLY INVOLVE DEALING WITH ____________.

PRICE COMPETITION

• Many successful companies have suffered huge dents in what was an otherwise smooth trajectory or profitable growth when they failed to anticipate and manage how competitors might react

CREATING A STRATEGIC PRICING CAPABILITY

• A successful pricing strategy requires the support of three pillars:
• An effective organization
• Timely and accurate information
• Appropriately motivated organization

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