Trade Marketing - Pricing Management

Flashcards about Trade Marketing pricing strategies.

Value

Benefit RECEIVED vs PAID amount.

Satisfaction

RECEIVED vs EXPECTED.

The price the brand can sustain

Functional + Emotional benefits divided by price. As benefits increase, what also increases?

Destination Pricing Role

Based on Retailer Strategy: Low prices (Cost Leadership), Higher prices (Differentiation & Category Mix)

Core / Routine Pricing Role

Competitive and close to the competition prices.

Occasional / Seasonal Pricing Role

Opportunity for higher prices at the beginning, lower prices (including promos) at the end.

Convenience Pricing Role

Competitive prices or higher when convenience is a benefit.

How should product pricing be set?

It should be related to promotion.

EDLP (Every Day Low Price)

Low price, high value-for-money position (Wal-Mart, Mercadona).

Hi-Lo Pricing

Frequent, aggressive promotions from higher regular prices.

EDLP Strategy

Constantly adjusting prices downwards, passing on savings.

Hi-Lo Strategy

Aggressive promotional activities to attract clients, often using hook products.

Defining Pricing Positionings

Influenced by business objectives and consumer dynamics.

Psychological Pricing

Non-rounded prices, ending prices in 9 or 5.

Profitability Formula

Profitability = Margin x Rotation.

Economic Theory - Natural Price

An equilibrium between supply and demand.

The percentage change in volume divided by the percentage change in price

Define price elasticity of demand.

A 1% increase in price leads to a 1% loss in volume sales.

A regular price elasticity of -1 indicates what?

Characteristics of More Price Sensitive Items

Low brand loyalty, little product differentiation, many competitors, highly promoted.

Characteristics of Less Price Sensitive Items

High brand loyalty, infrequent purchase, few competitors, health & beauty.

What price strategy is most appropriate for high elasticity and low price index?

Right Price.

Pricing Strategies for Price Focused Brands

Follow price decreases to remain competitive, take advantage of high volume share.

Pricing Strategies for Low Equity Brands

Respond rapidly to price changes while building brand equity.

Pricing Strategies for Niche Brands

Only respond to pricing of value brands entering the niche, continue marketing niche benefit.

Pricing Approach in Petrol Stations

Consumers are less price focused; purchases are needs-driven; narrow assortment reduces price consciousness.

Pricing Approach in Convenience Stores

Consumers are less price focused and purchases are needs driven (stock up). Competitive pricing within the available range is still relevant.

Pricing Consumer Approach in Hypers/Supers

Available time and wide product range increase consumers’ price sensitivity; shelf price position is critical.