Directory UMM :Slide_Kuliah:PPT:MP_Kotler_10:

(1)

(2)

Objectives



Setting the Price



Adapting the Price



Initiating & Responding to Price

Changes

(3)

Price

High

Medium

Low

High

Low

P

ro

d

u

ct

Q

u

a

lit

y

Med

Premium Value Premium Value Medium Value Economy Overcharging Rip-Off False Economy High Value Super Value Good-Value

Price - Quality Strategies

(4)

Setting Pricing Policy

1. Selecting the pricing objective

2. Determining demand 3. Estimating costs

4. Analyzing competitors’ costs, prices, and offers

5. Selecting a pricing method

(5)

Types of Costs

Total Costs

Sum of the Fixed and Variable Costs for a Given Level of Production

Total Costs

Sum of the Fixed and Variable Costs for a Given Level of Production

Fixed Costs (Overhead)

Costs that don’t vary with sales or

production levels. Executive Salaries

Rent

Fixed Costs

(Overhead)

Costs that don’t vary with sales or

production levels. Executive Salaries

Rent

Variable Costs

Costs that do vary directly with the level of production.

Raw materials

Variable Costs

Costs that do vary directly with the level of production.

(6)

The Three C’s Model

for Price Setting

Costs _{Competitors’} prices and prices of substitutes

Customers’ assessment of unique product features

Low Price No possible

profit at this price

High Price No possible

demand at this price

(7)

Pricing Methods



Markup Pricing



Target Return Pricing



Perceived Value Pricing



Value Pricing



Going-Rate Pricing



Sealed-Bid Pricing

(8)

Some important pricing definitions



Utility: The attribute

that makes it capable

of want satisfaction



Value: The worth in

terms of other

products



Price: The monetary

medium of exchange.

Value Example

Value Example:: Caterpillar Caterpillar Tractor is

Tractor is $100,000$100,000 vs. vs. Market

Market $90,000$90,000 $90,000 if equal

$90,000 if equal

7,000 extra durable7,000 extra durable

6,000 reliability6,000 reliability

5,000 service5,000 service

2,0002,000 warranty warranty

$110,000 in benefits -$110,000 in benefits -

$10,000 discount!

(9)

Promotional Pricing



Loss-leader pricing



Special-event pricing



Cash rebates



Low-interest financing



Longer payment terms



Warranties & service contracts

(10)

Psychological Pricing



Most Attractive?



Better Value?



Psychological

reason to price this

way?

A

32 oz.

$2.19

B

26 oz.

$1.99

(11)

Discriminatory Pricing

Time

Product-form

Customer

Segment

(12)

Price-Reaction Program for

Meeting a Competitor’s Price Cut

Has competitor

cut his price? NoNo

Hold our price at present level; continue to watch

competitor’s price

Is the price likely to significantly hurt our sales?

Yes

Is it likely to be a permanent

price cut? Yes

Yes

By more than 4%

Drop price to competitor’s

price

By 2-4%

Drop price by half of the competitor’s

price cut

How much has his price been

cut? Yes

Yes

No NoNo

By less than 2%

Include a

cents-off coupon for the next

(13)

Review



Setting the Price



Adapting the Price



Initiating & Responding to Price

Changes

(1)

Some important pricing definitions



Utility: The attribute

that makes it capable

of want satisfaction



Value: The worth in

terms of other

products



Price: The monetary

medium of exchange.

Value Example

Value Example:: Caterpillar Caterpillar Tractor is

Tractor is $100,000$100,000 vs. vs. Market

Market $90,000$90,000 $90,000 if equal

$90,000 if equal

7,000 extra durable7,000 extra durable

6,000 reliability6,000 reliability

5,000 service5,000 service

2,0002,000 warranty warranty

$110,000 in benefits -$110,000 in benefits - $10,000 discount!

(2)

Promotional Pricing



Loss-leader pricing



Special-event pricing



Cash rebates



Low-interest financing



Longer payment terms



Warranties & service contracts



Psychological discounting

(3)

Psychological Pricing



Most Attractive?



Better Value?



Psychological

reason to price this

way?

A

32 oz.

$2.19

B

26 oz.

$1.99

(4)

Discriminatory Pricing

Time

Product-form

Customer

Segment

(5)

Price-Reaction Program for

Meeting a Competitor’s Price Cut

Has competitor

cut his price? NoNo

Hold our price at present level; continue to watch

competitor’s price

Is the price likely to significantly hurt our sales?

Yes

Is it likely to be a permanent

price cut? Yes

Yes

By more than 4%

Drop price to competitor’s

price

By 2-4%

Drop price by half of the competitor’s

How much has his price been

cut? Yes

Yes

No NoNo

By less than 2%

Include a

cents-off coupon for the next

(6)

Review



Setting the Price



Adapting the Price

