Global Pricing Strategy
Part IV. The global marketing mix
2. Global pricing strategy
1
Cheap and cheaper…
2
Expensive and more expensive…
3
1. Basic pricing concepts
Introduction
Price: the amount charged to customers/consumers in exchange for goods or services
Market price: the price that prevails in the market for a particular good at a specific time
3 key elements of market price: supply, demand and time
Eg: hotel prices – peak season during summer – higher prices driven by the demand (more people willing to go on holidays); by the supply
(less hotels available) and by the time (July-August)
4
1. Basic pricing concepts
Factors influencing pricing:
Market Factors:
Environmental Factors:
• Government influences and constraints • Currency fluctuations
• Business cycle stage, level of inflation • Use of non-money payment and leasing 5
• Consumers perceptions, expectations and ability to pay
• Need for product adaptation, market servicing • Market structure, distribution channels discounting pressures
• Market growth, demand elasticities
• Need for credit
• Competition objectives, strategies and strengths
Product – company factors:
• Corporate and marketing objectives • Firm and product positioning
• Product range, life cycle, substitutes, product differentiation and unique selling propositions
• Cost structures, manufacturing, experience effect and economies of scale • Marketing, product development
• Available resources
• Inventory
• Shipping costs
2. Global pricing strategies:
1. Market skimming and financial objectives:
Market skimming pricing strategy: part of a deliberate attempt to reach a market segment that is willing to pay a premium price for a particular brand or for a specialized or unique product
Used by companies: seeking competitive advantage by pursuing differentiation strategies or positioning their products in the premium segment
2. In the introductory phase of the product life
2. Global pricing strategy
1
Cheap and cheaper…
2
Expensive and more expensive…
3
1. Basic pricing concepts
Introduction
Price: the amount charged to customers/consumers in exchange for goods or services
Market price: the price that prevails in the market for a particular good at a specific time
3 key elements of market price: supply, demand and time
Eg: hotel prices – peak season during summer – higher prices driven by the demand (more people willing to go on holidays); by the supply
(less hotels available) and by the time (July-August)
4
1. Basic pricing concepts
Factors influencing pricing:
Market Factors:
Environmental Factors:
• Government influences and constraints • Currency fluctuations
• Business cycle stage, level of inflation • Use of non-money payment and leasing 5
• Consumers perceptions, expectations and ability to pay
• Need for product adaptation, market servicing • Market structure, distribution channels discounting pressures
• Market growth, demand elasticities
• Need for credit
• Competition objectives, strategies and strengths
Product – company factors:
• Corporate and marketing objectives • Firm and product positioning
• Product range, life cycle, substitutes, product differentiation and unique selling propositions
• Cost structures, manufacturing, experience effect and economies of scale • Marketing, product development
• Available resources
• Inventory
• Shipping costs
2. Global pricing strategies:
1. Market skimming and financial objectives:
Market skimming pricing strategy: part of a deliberate attempt to reach a market segment that is willing to pay a premium price for a particular brand or for a specialized or unique product
Used by companies: seeking competitive advantage by pursuing differentiation strategies or positioning their products in the premium segment
2. In the introductory phase of the product life