Pricing StrategyPricing Strategy

YearbookYearbook

How much would you be willing to spend for:How much would you be willing to spend for:– Your high school yearbook as a seniorYour high school yearbook as a senior– Your ticket to the junior or senior promYour ticket to the junior or senior prom

We each place different value (and willing to We each place different value (and willing to pay different price) for the same productpay different price) for the same product

Example Example 44

You made T-shirts for Girls Lax and cost You made T-shirts for Girls Lax and cost you $4/shirtyou $4/shirt

You sell each shirt for $10/shirt?You sell each shirt for $10/shirt? What’s the margin or profit?What’s the margin or profit? Would lowering the selling price to $7 Would lowering the selling price to $7

increase profits?increase profits?

TicketsTickets

Brockton Rox tickets are $6. They don’t Brockton Rox tickets are $6. They don’t offer discount tickets. Why?offer discount tickets. Why?

Substitutes – Brand LoyaltySubstitutes – Brand Loyalty

There are lots of products with available There are lots of products with available substitutes (cereals, detergents, etc.)substitutes (cereals, detergents, etc.)

Name a product where you would not Name a product where you would not accept a substitute?accept a substitute?

Luxury vs. Necessity Luxury vs. Necessity 44

Gym membershipGym membership Cell phoneCell phone Cold medicine when you’re sickCold medicine when you’re sick Gas for your carGas for your car

Urgency of Purchase Urgency of Purchase 44

When was the last time you bought When was the last time you bought something because of a time restriction?something because of a time restriction?

HHS tickets going on sale – more at door?HHS tickets going on sale – more at door? Gas when your car was on emptyGas when your car was on empty Infomercial with time winding downInfomercial with time winding down

Price wars Price wars 44

Airline tickets, gasoline, computersAirline tickets, gasoline, computers How much does price factoring in the three How much does price factoring in the three

products named above?products named above? Is anyone loyal to an airline? Why?Is anyone loyal to an airline? Why? Frequent flyer miles Frequent flyer miles

Product life cycle Product life cycle 55

Where do the following products fall within Where do the following products fall within the four phases (think about prices as the the four phases (think about prices as the product moves from product moves from Introduction>Growth>Maturity>Decline:Introduction>Growth>Maturity>Decline:

Cell phoneCell phone IpodIpod Paper clipsPaper clips TypewriterTypewriter