PMK- W7 + W8

The market and demand

-Pure competition: Many sellers, identical products, price takers, no control over price.

-Monopolistic competition: firms compete with slightly different products (e.g., shampoo, clothing

-Oligopolistic competition: large firms dominate (e.g., airlines, smartphones)

-A pure monopoly: single firm controls the entire market (e.g., utility companies)

Elastic Demand

changes greatly, small change in price

Inelastic demand

hardly changes with small change in price

The economy and other external factors

price skimming

Iphone
Selling high price in early stages and reduce later

penetration pricing

attempting to sell to the whole market at one low price
ex: TH true milk

competitive pricing

setting prices relative to the competition (more likely in maturity stage)

General pricing approaches

pursuit customer

formula for pricing

Cost (floor price) \< price \< perceived value (ceiling price)

price setting: floor to ceiling

factors effecting in setting price

competitor pricing

costs

perceived value, consumer

Captive product pricing

sets prices of products that must be used along with the main product (E.g. Kindle)

Product Line and Optional Product Pricing

By-product pricing

Product bundle pricing

Product bundle pricing

combines several products at a reduced price
=> stick product with others: buy toothpaste gift toothbrush

By-product pricing

sets a price for by-products in order to make

the main product’s price more competitive.

discount and allowance pricing

reduces prices to reward customer responses

such as making volume purchases, paying early, or promoting the product.
=> directly discount If pay early

segmented pricing

involves selling a product or service at two or

more prices, where the difference in prices is not based on differences in costs.

• Customer-segment pricing

• Product-form pricing

• Location-based pricing

• Time-based pricing

psychological pricing

not simply the economics; the price is used to

say something about the product.

reference prices

buyers carry in their minds and refer to when they look at a given product.

ex: difference btw online and offline shopping make customer set a reference prices themselves.

promotional pricing

is characterized by temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales.

Examples include:

• special-event pricing

• limited-time offers

• cash rebates

• low-interest financing, extended warranties, or free maintenance

geographic pricing

used for customers in different parts of the country or the world.

• FOB-origin pricing

• Uniform-delivered pricing

• Zone pricing

• Basing-point pricing

• Freight-absorption pricing

FOB-origin (free on board)

pricing is a geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination.

basing- point pricing

basing point, in city (HCM) one price shipping setting. Around HCM 1km/1$

Freight-absorption pricing

free shipping

dynamic pricing

airline prices

adjusting prices continually

international pricing

same products different countries different price

selling cost equal price

break-even