Miss Essay

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Slide 1 Definition: Pricing strategy--Market/ demand-based * Set the product price based on consumer expectations and demand. * Companies that face high levels of competition will use market-based pricing strategy. (e.g.) Slide 2 Market-based * New product launch strategy * Target costing * Psychological pricing * Perceived value pricing * Product mix pricing Slide 3 New product launch strategy Slide 4 Target costing Target costing is a process of determining the actual cost price of any product or service after considering the desired profit margin. Formula Target Cost = Expected selling price – Desired profit Slide 5 Psychological pricing * Odd-even pricing * Bundle pricing (also a tactic) * Yield management Adjust price based on demand. e.g peak and off peak ticket price * Segmentation pricing Set more than one price for different groups of customers for a one product. (e.g. student price and young person tickets) Slide 6 Perceived Value pricing http://www.youtube.com/watch?v=qfmu9S1lehw Customers have different ideas about value. The different interpretation of value by customers will influence pricing strategy and tactics. E.g. man in the video-value=quality, everything he wants in a service- good value pricing, prestige pricing Women=low price-discounting Slide 7 Product Mix pricing tactics Definition: * Product line pricing Decide on the price between various products in a line * Optional product pricing * Captive product pricing * Multi-dimensional pricing Pricing tactics Pricing tactics: is the strategy of altering prices in the short term in order to gain an advantage over a competing product, service, or brand. Regular pricing tactics: Discounting: Odd-value pricing Loss leader Skimming

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