Lecture 8 mba_marketing_management_-_pricing

MBA MARKETING MANAGEMENT ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

INTRODUCTION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

THEORY OF PRICING Much of the theory of pricing is derived from that of economics. The basic idea is that, ‘ Demand will be different at each price level chosen’ As can be seen from the diagram, demand normally (but not always) falls as price increases. Demand curve Price Quantity demanded

[object Object],[object Object],Supply curve Price Quantity supplied

[object Object],[object Object],Price £ Demand Supply Equilibrium Price Quantity

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

PRICING OBJECTIVES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

STRATEGIC DTERMINANTS OF PRICE ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Cost Competition Demand

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Revenue from Product X – Direct variable costs = Contribution of X Revenue of Product Y – Direct variable costs = Contribution of Y

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object], Price Ceiling Demand What the market will Costs Price Floor Competitors Price Range Within this band, there may be agreement between competitors (eg petrol/cigarettes) to avoid retaliatory responses.

POSITIONING AND LIFE CYCLES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

PRICING STRATEGIES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],First layer of customers Second layer Third layer etc ,[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Penetration pricing Leads to increased sales and market share A typical example would be a new breakfast cereal or a product launched in a new overseas market. Initially it would be launched with a relatively low price, coupled to discounts and special offers. As the product penetrates the market, sales and profitability increase. Prices can then creep upwards.

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Price Natural Market Price Price which yields lowest acceptable long-term return on capital invested Destroyer price range

[object Object],[object Object],[object Object],[object Object],[object Object]

Lecture 8 mba_marketing_management_-_pricing

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Lecture 8 mba_marketing_management_-_pricing