Group 1

introducing
PRICE ADAPTION
STRATEGIES



PROMOTIONAL Pricing
reducing the price of a product or service temporarily to attract customers and
develop loyalty for increased future revenue and profit
PROMOTIONAL Pricing
When is it done?
This is sometimes done because the sales of the product are falling and
the firm wants to renew customer's interest in it. Or perhaps the
product has gone out of fashion, and the firm wants to clear their stock.
Examples:
Buy-one-get-one-free scheme
50-70% discount
This technique may be used by retailers or producers alike.
When it is used by retailers, the goal is generally to attract
attention to the business and to attract regular customers.
When the technique is used by producers, the goal is generally
to attract customers to a product or brand and to encourage
brand loyalty.
TYPES of
PROMOTIONAL
PRICING
SALE
SPECIAL EVENT
PRICING
CASH REBATES
LOW INTEREST
FINANCING
And WARRANTIES and SERVICE CONTRACTS
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aims to provide a short-term boost to sales
sales promotion looks for alternatives that are more cost-effective -
costing less to implement but providing a bigger increase in sales
Sales promotion is needed to attract new customers, to hold present
customers, to counteract competition, and to take advantage of
opportunities .
often drop prices on branded products to promote their stores' sales
A temporary reduction in the price, such as 50% off.
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Pricing that is 'special' (or lowered) for special events such as
Christmas, Easter, Valentine's Day, Mother's Day, Super Bowl,
Thanksgiving and Back to School.
involves advertised sales or price cutting that is linked to a holiday,
season, or event
A limited time sale price

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Cash rebates work like manufacturer coupons, with a twist. Rebates
offer discounts on products you purchase, but some rebates have
terms that require you to take a few extra steps to reap the savings.
Sell for list price but offer discount via cash back
OBJECTIVE: Maintain list price; offer appearance of a deal; reduce
cost of discount by % of buyers who do not pursue the rebate
procedure
Cash rebates allowed by auto manufacturers and some consumer
goods manufacturers within a specified time period.
Such as a rebate or allowance when buying a home
and the seller offers a move-in allowance, or a carpet
replacement or renovation allowance or a rebate for
all cash, no financing, and purchases of big ticket items
like cars.

REBATE?
An offer to consumers for a cash discount
on the purchase of a consumer good. The
rebate option may also be called "cash
back", though the consumer will not actually
receive cash in hand - the "cash back" is
used to directly reduce the purchase price.
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Low interest financing is provided on certain consumer goods like
automobile, motorcycle, television, refrigerators, air conditioners
Maintain list price; attract more buyers via lower monthly payment
or even no-interest financing ; Seller pays part of interest cost
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A common technique is adding a free, or low cost warranty to help
increase sales.
This attract more buyers by reducing their perceived risk
Buyers view these types of promotional prices very positively
because they believe it shows that the business has high confidence
in the product's performance.
Warranties and service contracts are provided on, especially, the
consumer goods like television, refrigerators, air
conditioners,personal computers, etc






DISCRIMINATORY Pricing
occurs when a business charges a different price to different groups of consumers
for the same good or service
Price discrimination allows a company to earn higher profits than
standard pricing

Example: Air fare
Economy seats = Php 10,000
First Class seats = Php 30,000
Different Degrees of Price Discrimination
1. First Degree Price Discrimination
This involves charging consumers the maximum price that they are willing to pay.
There will be no consumer surplus. (Price varies by customer)
Example: Ukay-ukay; Car dealers
2. Second Degree Price Discrimination
This involves charging different prices depending upon the quantity consumed.
(Price varies according to quantity sold)
Example: Safeguard soap (per box= P30) more expensive than 3-pid pack;
Seaoil Protection Card (2008)
Original Cost = PHP 58.00
20 Liters of gas = PHP 1,070 (53.50 / per lr.)



3. Third Degree Price Discrimination
This involves charging different prices to different groups of people. (Price varies
by location or by customer segment)
Example: Jeepney fare (Seniors and students fare = PHP 7.00) Orig. price=PHP 8.00
IMAGE
PRICING
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Different customer groups are charged different prices for
the same product or service. For example, museums often
charge a lower admission fee to students and senior citizens. (price
according to age, gender, interests, spending habits)
Price segmentation happens every day, perhaps you've
experienced some of these examples:

Control brands, such as private label products vs. national brands
Customer segments, such as member vs. non-member prices for
products and services.

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Different versions of the same product are priced differently but not
proportionately to the increase in costs

e.g.
Microsoft sold different versions of its operating software Windows XP at
different price level. 'Windows Vista Home Basic Version' is sold at $200
and with some variations the same operating software 'Windows Vista
Ultimate Version' is sold at $320

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Some companies price the same product at two different levels
based on image differences.

e.g.
A perfume manufacturer can put the perfume in one bottle, give it a name
and image, and price it at P110 an ounce. It can put the same perfume in
another bottle with a different name and image and price it at P220 an
ounce.

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Discriminatory pricing based on different locations, even though
the cost of offerings at each location is identical.

e.g.
Theatre charges different prices for different audience preferences for
different locations
Buying goods at a supermarket vs. a gas station.

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Prices are varied by seasons, day or hours.

Time pricing is usually applicable in public utilities like electricity, telephone
bills, hotels and airlines, and also for internet hours

e.g. Time based, as in hotels or attractions that are more or less expensive on
weekdays or weekends.


Any questions?
THE END