BERMAN09.PPT 29KB Jun 05 2011 09:30:17 PM

MARKETING CHANNELS
Pricing Strategy
Berman Chapter 9
Version 3.0
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A. Introduction
B. Price vs Non Price Competition

C. Pricing Objectives
D. Overall Pricing Strategy
E. Cost-Oriented Pricing
F. Demand-Oriented Pricing
G. Competition-Oriented Pricing
H. Integrated Pricing
I. Pricing policies
J. Gray Markets
K. Adapting Price Strategies
L. Legal Aspects

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• A. Introduction
• B. Price vs Non Price Competition

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• C. Objectives
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sales based
profit based
gross margin, return on investment
status quo based

• D. Overall Pricing Strategy
– cost approach
– demand approach
– competition approach
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• E. Cost - Oriented Pricing
– markup pricing
• at retail, at cost

– variable markup policies

– planned initial markup percent by retailers
– direct product profitability
• winners - dogs, sleepers - traffic builders

• sources of gross margin data
– Robert Morris Associates
– Dun and Bradstreet Annual Statement Studies
– Progressive Grocer Annual Report

• small samples, different years and5geogs

• F. Demand-Oriented Pricing
– demand minus, chain markups

• G. Competition-Oriented Pricing
– competitive bidding

• H. Integrated Approach to Pricing Strategy

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• I. Determining Pricing Policies
– High, Low Pricing
• forward buying, trade loading

– Every Day Low Pricing EDLP

• J. Gray Market Goods
• domestic vs foreign
• parallel vs diverted

– Risks of Gray market
• free rider phenomenon

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• Strategies to limit gray marketing
– Identify firms that have resold to gray resellers
– Set quantity discounts schedule and price
strategy by market to reduce transshipping

– differentiate products sold to different markets
– develop customer awareness of risks with
transshipped goods
– Develop an MIS to monitor above average
purchase levels by companies

• Price Guarantees
• Selling Against the Brand
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• K. Adapting the Price Strategy
– additional discounts, markups

• L. Legal Aspects of Pricing
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resale price maintenance

state sales-below-cost laws
gray market goods
price discrimination
• Robinson Patman

– Discounts and Terms
• availability rule

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