Pricing strategy and tactics pdf,online marketing trends pdf download,best program to presentation - PDF Books

28.12.2013
Strategic Marketing Science provides nine different strategies for Pricing based on product quality (see below). The reality is sometimes Strategic Pricing is contextual to competitive pricing or other uncontrollable factors. Organisational resources, marketing effort, and budget also play in selecting the best Pricing Strategy.
Advanced pricing strategy is about advanced marketing management: Real-time, for each individual segment! Value-based pricing uses buyers’ perceptions of value, not the seller’s cost, as the key to pricing.
For many industrial products, the costs perceived by customers extend well beyond the price charged.
An industrial purchaser perceives the cost of equipment as including installation, maintenance, training and use of consumables, as well as the basic purchase price. Equipment purchases are evaluated over their economic lives and comparisons between competitors go beyond straight price assessment. The company bases its price largely on competitors’ prices, with less attention paid to its own costs or demand.
In oligopolistic industries that sell a commodity such as steel, paper or fertiliser, companies normally charge the same price. The smaller firms follow the leader: they change their prices when the market leader’s prices change, rather than when their own demand or cost changes. If you have read this far, you are probably ready to engage a pricing strategy marketing consultant.
Remember, "Procrastination is the thief of time" and the sooner you act, the sooner you'll achieve your goals!
It all started with Byron Sharp’s books- how brands grow, and how brands grow part 2  an insightful, data laden read I commend to you.
In this vein, I’ll be commencing a series on pricing- setting price, price psychology, etc- aimed at enabling GMs to impact their bottom line in a very direct and positive way by understanding how pricing works, all supported by appropriate research.
In theory, your right price should fall between your total cost to serve the product (fixed plus variable costs including advertising, promotions, discounts and incentives) and the value your customers perceive in your product- leaving you with a profit and your consumers with the feel that they have a bargain. Your pricing potential is related to the perceived value your customers have for your product, and their willingness and ability to pay. Understand what your advantage is to your customers – the relative value you add compared with that of your competitors by comparing your product to theirs. You’ll need to understand the link between the prices you charge and the volume you get . To determine your strategy, focus on your key differentiating factor—your strategy should reinforce this unique value to keep your customers loyal and willing to pay more due to the unique benefits you offer.
You can also use a SKIMMING or branding strategy- take a product you know you can make at a low cost and influence consumer perception to add value to your product and sell it at a high price- some would say that Coca Cola uses this strategy to generate fantastic margins upon the base of a relatively cheap to make product. You can PENETRATE to disrupt- by taking what has traditionally been a high price product and sell it cheaply to build your share of the market. OK, we have the strategy, but how do you make those pricing decisions that realize extra profits? My initial blog on pricing strategy, ‘How To Set Prices To Seriously Increase Profit,’ was written to identify pricing as an under-utilized tool to drive your company’s bottom line.
While there is recognition that market focused options are more effective in building longer-term profitability,  >80 per cent of companies continue to price their products or services primarily on the basis of costs or competitive prices.
With Customer Based Pricing (sometimes referred to as Value Based Pricing), the seller makes decisions based on the estimated value of the product or service from the customer’s perspective. Well, let’s be honest, we’ll never know exactly what a given customer is willing to pay, but we can use experience and research to estimate what they are prepared to pay.


Experience – If you’ve been doing this for a while, you’ve gathered a lot of data about your market.
The more you are able to apply your experience, the greater your ability to understand your customer’s willingness to pay. Simulation exercises in which customer price sensitivity, competitor reactions and other factors are considered. As you move into Customer Based Pricing, companies must fully understand the customer, their motivations, and what they value. However, there are weaknesses to this pricing strategy, both for today’s ‘deal’ and for tomorrow’s ‘relationship’. This approach can alienate those customers who pay more; it can be viewed as discriminatory.
Customer Based Pricing can also lead to internal conflict between sales people (especially commissioned sales people) and other groups within the selling organization.
Boardroom Metrics Marketing Consultants provide strategy and execution solutions for your inbound and outbound marketing objectives; including social media, branding, pricing and advertising. Following is a table with some guidance on which costs you should consider for different decisions you would like to make.
Just email us by clicking this button, or fill out this form and a consultant will get back to you ASAP. But I have also been digging into other perceptions we take for granted and to see if there is empirical, data driven proof to support them. Products with more features and benefits can often be priced higher as long as customers see some value in those extras. Understand that even if you’ve added more value, you may not be able to charge more for very long, because your competitors may copy your product and charge less than you for it.
In an emerging industry, where customers are forming new relationships, you need to be flexible to determine the right price and the best product-market combination to be able to grow with the growing market.
If you’re competing against giants, a frontal assault with lower prices may only cause your failure. Ideally, your price and your costs should make your cash flow positive, you should make money. If you price higher, you’ll need to be able to persuade customers of the extra value you offer to justify your pricing. Seek to identify a long-term advantage where you can defend your differentiation- can you consistently remain the lowest cost producer, or can you consistently remain an innovative high quality value adding producer.
This will work if you are able to accept a low margin or you can make it significantly cheaper than the competition- Supermarket own brands take this approach accepting significantly lower margins on consumer goods knowing they will make money through selling more Price based on perception.
Many businesses sell some products at a lower price and promote these lower prices to attract customers—this practice is relatively common in retail and fast food.
Some of the most successful computer makers and other high-tech manufacturers have introduced their fantastic new product at a high price, then lowered prices as competitors copied them. American consumers are used to cheap products but not cheap services, so think about offering services and warranties. This means that if your business is a high-end business, your prices should be at the high end and so should the rest of your operation. Since pricing is a complex issue for many organizations, I decided to write a series of posts regarding different types of pricing strategies, moving along a continuum from the simple to the more complex. Since this will likely result in variable pricing by customer or customer segment, this approach should deliver the maximum amount a company can charge for its product or service. In addition to tracking a variety of inputs, you’ve likely segmented the market by product, customer and competitor. How will they use the product, how do they segment their business, is this a strategic purchase or merely a tactical buy?


If your customer suspects price discrimination, he will become more aggressive to secure a lower price.
A buyer who understands that pricing will be set on perceived willingness to pay has no incentive to appear attracted to the sellers product or value proposal.
For example, in situations where there is aggressive negotiation, the salesperson may be inclined to offset the volume risk through price concessions.
While willingness to pay will differ between customers, it may also differ within the same customer in diverse situations…. While this approach will theoretically maximize volume and profit, it’s important to develop and resource an ongoing process to gather, interpret and apply data. If you have a specific issue or question related to my expertise I am happy to share my thoughts with you.
Value based segmentation techniques talks about defining segmentation based on value placed by customers on the product. For example, a luxury brand vehicle is priced higher than an economy compact car, and chicken-rice at Boon Tong Kee costs more than at a Hawker centre. In mature industries, relationships between your competitors and your potential customers are already set. If you price lower, you’ll need to be consistently more cost-efficient producing your product to earn a margin similar to your competitors. If you can’t, others may enter the market and erode your edge, prices and profitability. If so you can either use a PREMIUM strategy adding extra value at high cost to you and pricing it at a high cost to consumers. Customers may believe “you get what you pay for” and so really low prices especially for good like make up or pharmaceuticals or even beer can be detrimental to sales.
For instance, new technologies may offer more benefits than existing ones and provide high margins. Selling warranties can be great for profits, especially if your product or service is high quality. If, on the other hand, you want volume, then you need to know how to compete in the large segments of your industry.
Is it a component of a commodity product they make, or a small element of a value added item they produce?
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As the new entrant, you’ll need to find the segment that will switch vendors and also pay more for the added satisfaction you offer. If you price the same, you’ll need to differentiate yourself elsewhere to attract customers otherwise why should they change from their current supplier. If you want to succeed in a niche market, know the market’s needs, and price your products accordingly.
They may withhold important information, appear negative and comparison shop more aggressively.
The selling organization needs to be committed to Customer Based Pricing, including the principle of ongoing research. This kind of negotiation leads to a transactional approach versus the development of a long-term partnership.



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