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Chapter 14: Developing Price Strategies
and Programs
Francis L. Estolano
May 10, 2013
How Much Are You?
Outline:
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• 6 Steps in Setting Price
• Price Adaptation Strategies
6 Steps in Setting Price
Select the
Price
Objective
Determine
Demand
Estimate
Costs
Analyze
competitor
prize
Select
Pricing
method
Select final
price
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1st Step: Selecting the Price Objective
• Survival
• Maximum current profit
• Maximum market share
• Maximum market skimming
• Product-quality leadership
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2nd Step: Determining Demand
• Price Sensitivity
• Estimating Demand Curves
• Price Elasticity of Demand
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3rd Step: Estimating Costs
• Types of Costs
• Accumulated Production
• Activity-based Cost Accounting
• Target Costing
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4rd Step: Analyze Competitor Price Mix
• Identify industry price
• Compare with costs of product
• Change pricing strategy
• Stay ahead with trends in pricing
strategy through competitor
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5th Step: Selecting Pricing Method
• Mark up Pricing
• Target-Return Pricing
• Perceived-Value Pricing
• Value Pricing
• Going-rate Pricing
• Auction Type Pricing
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6th Step: Selecting the Final Price
• Impact of other marketing activities
• Company pricing policies
• Gain and risk sharing pricing
• Impact of price on other parties
6 Steps in Setting Price
Select the
Price
Objective
Determine
Demand
Estimate
Costs
Analyze
competitor
prize
Select
Pricing
method
Select final
price
www.francisestolano.blogspot.com
ph.linkedin.com/in/estolanofrancis/
VS
4 Price-Adaptation Strategies
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1. Geographical Pricing
2. Price Discounts and Allowances
3. Promotional Pricing
4. Differentiated Pricing
Geographical Pricing
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The practice of
modifying a basic list of
price based on
geographical location
Price Discounts and Allowances
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Prices of goods or
services are being
reduced.
Promotional Pricing
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• Loss-leader Pricing
• Special Event Pricing
• Cash Rebates
• Low-Interest Financing
• Longer Payment Terms
• Warranties and Service Contracts
• Psychological Discounting
Differentiated Pricing
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• Customer Segment Pricing
• Product form Pricing
• Image Pricing
• Channel Pricing
• Location Pricing
• Time Pricing
• Yield Pricing
REMEMBER THIS….
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4$
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Chapter 14: Developing Price Strategies
and Programs
Francis L. Estolano
May 10, 2013
How Much Are You?

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