Pricing Strategies - · PDF filePrice Changes Initiating Price Cuts – excess capacity, strong price competition, weakened economy Initiating Price Increases –inflation, cannot

Pricing Strategies

Understanding and Capturing Customer Value

W. Rofianto

What Is a Price?

The amount of money charged for a

product or service, or the sum of the

values that customers exchange for

the benefits of having or using the

product or service

Major Pricing Strategies

Value-Based Pricing

Value-Based Pricing

Cost-Based Pricing

Competition-Based Pricing

no matter what price they charge—low or high— companies need to

offer great value for the money

▪ Under pure competition, the market consists of

many buyers and sellers trading in a uniform

commodity, sellers in these markets do not spend

much time on marketing strategy

▪ Under monopolistic competition, the market

consists of many buyers and sellers trading over a

range of prices rather than a single market price.

Sellers try to develop differentiated offers

▪ Under oligopolistic competition, the market

consists of only a few large sellers, price becomes

a major competitive tool

▪ In a pure monopoly, the market is dominated by

one seller, Pricing is handled differently in each

case.

New Product Pricing Strategies

Product Mix Pricing Strategies

Price Adjustment Strategies

Price Changes

Initiating Price Cuts – excess capacity, strong price competition,

weakened economy

Initiating Price Increases – inflation, cannot supply all that its customers

need

Responding to

Competitor

Price Changes

Public Policy Issues in Pricing

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