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1、10-1i t s good and good for youChapter TenPricing:Understanding and Capturing Customer Value10-2Pricing:Understanding and Capturing Customer Value What Is a Price? Major Pricing Strategies Other Internal and External Considerations Affecting Price DecisionsTopic Outline10-3Price is the amount of mon
2、ey charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service.What Is a Price?10-4Price is the only element in the marketing mix that produces revenue; all other elements represent costsWhat Is a Pric
3、e?10-5Major Pricing StrategiesUnderstanding how much value consumers place on the benefits they receive from the product and setting a price that captures that valueCustomer Value-Based Pricing10-6編輯pptMajor Pricing StrategiesCustomer Value-Based Pricing10-7Major Pricing StrategiesValue-based pricin
4、g uses the buyers perceptions of value, not the sellers cost, as the key to pricing. Price is considered before the marketing program is set.Value-based pricing is customer drivenCost-based pricing is product drivenCustomer Value-Based Pricing10-8編輯pptMajor Pricing StrategiesCustomer Value-Based Pri
5、cing10-9Major Pricing StrategiesGood-value pricingoffers the right combination of quality and good service at a fair priceCustomer Value-Based Pricing10-10Major Pricing StrategiesEveryday low pricing (EDLP) charging a constant everyday low price with few or no temporary price discountsCustomer Value
6、-Based Pricing10-11Major Pricing StrategiesHigh-low pricing charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected itemsCustomer Value-Based Pricing10-12Major Pricing Strategies Value-added pricing attaches value-added features and service
7、s to differentiate offers, support higher prices, and build pricing powerCustomer Value-Based Pricing10-13Major Pricing StrategiesCost-based pricing setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and riskCost-Based Pricing
8、10-14Major Pricing StrategiesCost-based pricing adds a standard markup to the cost of the productCost-Based Pricing10-15Major Pricing StrategiesCost-Based PricingTypes of costs10-16Major Pricing StrategiesFixed costs are the costs that do not vary with production or sales level RentHeatInterestExecu
9、tive salariesCost-Based Pricing10-17Major Pricing StrategiesVariable costs are the costs that vary with the level of productionPackagingRaw materialsCost-Based Pricing10-18Major Pricing StrategiesTotal costs are the sum of the fixed and variable costs for any given level of productionCost-Based Pric
10、ing10-19編輯pptMajor Pricing StrategiesCosts as a Function of Production Experience10-20Major Pricing StrategiesExperience or learning curve is when average cost falls as production increases because fixed costs are spread over more unitsCosts as a Function of Production Experience10-21Major Pricing S
11、trategies Cost-plus pricing adds a standard markup to the cost of the product Benefits Sellers are certain about costs Prices are similar in industry and price competition is minimized Buyers feel it is fair Disadvantages Ignores demand and competitor pricesCost-Plus Pricing10-22Major Pricing Strate
12、giesBreak-even pricing is the price at which total costs are equal to total revenue and there is no profitTarget profit pricing is the price at which the firm will break even or make the profit its seekingBreak-Even Analysis and Target Profit Pricing10-23編輯pptMajor Pricing StrategiesBreak-Even Analy
13、sis and Target Profit Pricing10-24Major Pricing Strategies Setting prices based on competitors strategies, costs, prices, and market offerings. Consumers will base their judgments of a products value on the prices that competitors charge for similar products.Competition-based pricing10-25Considerati
14、ons in Setting Price10-26Other Internal and External Considerations Affecting Price DecisionsTarget costing starts with an ideal selling price based on consumer value considerations and then targets costs that will ensure that the price is met10-27Other Internal and External Considerations Affecting
15、 Price DecisionsOrganizational considerations include: Who should set the price Who can influence the prices10-28Other Internal and External Considerations Affecting Price Decisions Before setting prices, the marketer must understand the relationship between price and demand for its productsThe Mark
16、et and Demand10-29Other Internal and External Consideration Affecting Price DecisionsCompetition10-30Other Internal and External Considerations Affecting Price DecisionsThe demand curve shows the number of units the market will buy in a given period at different pricesNormally, demand and price are
17、inversely relatedHigher price = lower demandFor prestige (luxury) goods, higher price can equal higher demand when consumers perceive higher prices as higher quality10-31Other Internal and External Considerations Affecting Price Decisions10-32Other Internal and External Considerations Affecting Pric
18、e DecisionsPrice elasticity of demand illustrates the response of demand to a change in priceInelastic demand occurs when demand hardly changes when there is a small change in price Elastic demand occurs when demand changes greatly for a small change in price10-33Other Internal and External Consider
19、ations Affecting Price DecisionsPrice elasticity of demand =% change in quantity demand % change in price10-34Other Internal and External Consideration Affecting Price Decisions10-35編輯ppt_ is the only element in the marketing mix that produces revenue.ProcessPrice PlacePromotion10-36編輯ppt_ is the on
20、ly element in the marketing mix that produces revenue.ProcessPrice PlacePromotion10-37編輯pptEveryday low pricing (EDLP) is a type of _ pricing based on buyers perceptions.value-addedcost-basedproduct-basedgood-value10-38編輯pptEveryday low pricing (EDLP) is a type of _ pricing based on buyers perceptio
21、ns.value-addedcost-basedproduct-basedgood-value10-39編輯pptIn _, the market consists of many buyers and sellers who trade over a range of prices rather than a single market price. oligopolistic competitiona pure monopolymonopolistic competitionpure competition10-40編輯pptIn _, the market consists of man
22、y buyers and sellers who trade over a range of prices rather than a single market price. oligopolistic competitiona pure monopolymonopolistic competition1.pure competition10-41編輯ppt_ pricing uses buyers perceptions of value, not the sellers cost, as the key to pricing.Cost-based pricing Product-base
23、d pricingCustomer value-based pricingCompetition-based pricing10-42編輯ppt_ pricing uses buyers perceptions of value, not the sellers cost, as the key to pricing.Cost-based pricing Product-based pricingCustomer value-based pricingCompetition-based pricing10-43編輯ppt_ do not vary with production or sale
24、s level.Overhead costsVariable costsTotal costsSum costs10-44編輯ppt_ do not vary with production or sales level.Overhead costsVariable costsTotal costsSum costs10-45編輯pptWhat refers to the drop in the average cost with accumulated production experience?Economies of scopeDemand curveUtility curve1. Le
25、arning curve10-46編輯pptWhat refers to the drop in the average cost with accumulated production experience?Economies of scopeDemand curveUtility curve1. Learning curve10-47編輯pptA food processor manufacturer has the following costs and expected sales:Variable cost = $15 per unitFixed cost = $600,000Exp
26、ected unit sales = 60,000What would be the unit cost?2025152210-48編輯pptA food processor manufacturer has the following costs and expected sales:Variable cost = $15 per unitFixed cost = $600,000Expected unit sales = 60,000What would be the unit cost?2025152210-49編輯pptWhat is the break-even unit volum
27、e for a company with fixed costs of $30,000, variable costs of $10, and a price of $20/unit?2,500 units2,000 units3,000 units3,500 units10-50編輯pptWhat is the break-even unit volume for a company with fixed costs of $30,000, variable costs of $10, and a price of $20/unit?2,500 units2,000 units3,000 u
28、nits3,500 units10-51編輯pptWhich type of market consists of a few sellers who are highly sensitive to each others pricing and marketing strategies?Oligopolistic competitionPure monopolyMonopolistic competitionPure competition10-52編輯pptWhich type of market consists of a few sellers who are highly sensi
29、tive to each others pricing and marketing strategies?Oligopolistic competitionPure monopolyMonopolistic competitionPure competition10-53編輯pptA reseller buys a product from a manufacturer for $40 and wants to earn 20 percent on the sales price. What will the new price be?4860545010-54編輯pptA reseller
30、buys a product from a manufacturer for $40 and wants to earn 20 percent on the sales price. What will the new price be?4860545010-55Projects Interview a local business about their pricing philosophy and/or strategy. Use their terms and then apply what you have learned from them to assess their appro
31、ach to those described in the text. What are the similarities and differences? (Objective 2)Use the local newspaper to compare grocery store ads for price specials. What can you determine about the competitors pricing strategies? How many of the techniques from the chapter do the organizations seem
32、to be using? What strategy appears to be the most successful? How did you make this judgment? (Objective 2) How does Walmart make use of good-value pricing? (Objective 2)Explain how companies such as Dell use cost-plus pricing. What are the competitive disadvantages of such pricing strategies? (Obje
33、ctive 3)Take a drive around town and look at the price of gasoline at a variety of different stations. Use oligopolistic competition to explain what you are seeing. (Objective 3)10-56Form students into groups of three to five. Each group should read Real Marketing 10.1 (p. 318). Each group should th
34、en answer the following questions and share their answers with the class. (Objective 1)Explain Southern Suns pricing strategy in your own words. What is meant by the term, “price” in this company? How is Southern Sun distinguishing itself from other hotel chains? Analyze the statement, “Give people something of value, and theyll gladly pay for it.” How does it a
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