Pricing Strategy

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1.Customer value: What a product or services is worth to the customer. 2.Pricing decision is usually viewed as a way to recover cost, but we need to take the customer into the account/ consideration. The price could be higher than customers are willing to pay for that product. 3.The major factors affecting price are:

a.Marketing Strategy
b.Customer perceived Value
c.Competition
d.Cost
4.Role of Marketing Strategy in Pricing
a.Price should be consistent with the pricing strategy.
b.Target market decision affects price because prices can vary widely over segments c.First-degree price discrimination: Charging different prices to segments according to their price elasticity or sensitivity. d.Price Bands or Tiers: Price Variations within a category e.Reason for having the price Variance:

i.Customers become loyal to certain products or suppliers and so they tend to rate price lower than other factors such as reliability and speed of delivery ii.Some industries the price visibility is low, that is the price charged is less transparent than it is at supermarkets or other retailers, where the price is marked on the item. iii.Competitive intensity can vary among segments. The larger the number of suppliers the narrower the price band because more competition implies greater convergence on a standard price iv.Some categories have large numbers of product Variants because many options are available or because the supplier wants to fill the channel and keep competitors from getting shelf space. 5.Perceived Value

a.This is a measure of how much a customer is willing to pay for a product or service. b.Reservation Price: The most someone is willing to pay for a product (or the price at which the product is eliminated from the customer’s budget). Every customer, whether consumer or business, has a psychological concept of such a price c.Three possible Relationships among perceived value, Price and Costs i.Perceived value> Price> Cost. (VALUE...
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