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Chap 10 - Price

The document discusses different pricing strategies including customer value-based pricing, cost-based pricing, and competition-based pricing. It covers concepts like price ceilings, price floors, everyday low pricing, high-low pricing, value-added pricing, cost-plus pricing, break-even pricing, and target return pricing. The document also discusses factors that influence pricing decisions such as a company's marketing strategy and objectives, market structure, demand elasticity, and external environmental factors.

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27 views3 pages

Chap 10 - Price

The document discusses different pricing strategies including customer value-based pricing, cost-based pricing, and competition-based pricing. It covers concepts like price ceilings, price floors, everyday low pricing, high-low pricing, value-added pricing, cost-plus pricing, break-even pricing, and target return pricing. The document also discusses factors that influence pricing decisions such as a company's marketing strategy and objectives, market structure, demand elasticity, and external environmental factors.

Uploaded by

Hải Hà Bạch Thị
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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TA NGUYỄN NGỌC ANH THƯ

CHAP 10: PRICING

I. What is a price?
- narrowly, price: amount of money charged for a product/service (chỉ giá của sp)
- broadly, price: sum of values that customers give up to gain benefits of having or using a
product or service (additional cost nữa, vd: mình mua lap giá 19m, price ở đây còn có chi phí
xăng đi đến bhx để mua sp)

II. Major pricing strategies

- price ceiling: maximum price, giá customer perceive


- price floor: minimun price, equal to the cost of production
1. Customer value-based pricing
- set price based on buyer’s perception of value rather than seller’s cost
- 2 types of value-based pricing:
Good-value pricing: offer right combination of quality and good service at a fair price (set giá
sao cho có sự cân bằng giữa c/lượng và giá cả)

• EDLP (every day low price): charge constant, everyday low price w/ few or no temporary
price discount (Giá mỗi ngày rẻ r nên ít khi discount)
Ex: walmart, big c, coopmart

• High-low pricing: charge higher prices on everyday but run frequent promotion to lower
price temporarily on selected items

1
TA NGUYỄN NGỌC ANH THƯ

Ex: những sp bán trong mall, hypermarket (aeon mall) > giá thường cao hơn > some days n
sẽ có discount
Value-added pricing: add quality, services and value added features to differentiate > sell
exceptional higher prices
Ex: luxury products
2. Cost-based pricing
Set giá dựa trên cost (producing, distributing selling, etc.) + profit (a fair rate of return for effort
and risk) / adds a standard markup to the cost of the product
- fixed cost: chi phí fixed trong quá trình sx
- variable cost: vary at different level of production
- total costs are the sum of the fixed and variable costs for any given level of production
How to calulate cost-plus pricing (markup pricing)?

FC=100,000/50,000=2
TC: 10+2=12
b) 20% markup on cost
markup price = 12 + 20%x12 = 14.4
a) 20% markup on sales
markup price = cost + 20%markup price
markup price: x
x= 12+ 20%*x => x = 15
c) 14.4 < 15 -> if company want to gain 20% markup on cost they will sell one product at 14.4,
which is lower than 15 (20% markup on sales)

• Break-even pricing (target return pricing)

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TA NGUYỄN NGỌC ANH THƯ

3. Competition-based pricing
Setting prices based on competitors’ strategies, costs, prices, and market offerings

III. Other internal & external considerations


Internal factors: company’s overall marketing strategy, objectives, and marketing mix
External factors: nature of the market and demand and other environmental factors
- Different types of market
• Pure competition: many buyers and sellers trading in a uniform commodity > no single
person can influence price (firms are price taker) > sellers do not spend much time on
marketing strategy
• Monopolistic competition: many buyers and sellers, diff products w/ diff price ranges >
> sellers try to develop differentiated offers for different segments
• Oligopolistic competition: a few large sellers > each seller is alert and responsive to
competitors’ pricing strategies andmarketing moves
• Pure monopoly: the market is dominated by one seller

- Price elasticity
• Price elasticity: a measure of the sensitivity of demand to changes in price
• Demand hardly changes with a small change in price (inelastic), demand changes greatly
with a small change in price (elastic)
• If demand is elastic rather than inelastic > sellers will consider lowering their prices >
produce more total revenue

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