Session 11 Pricing A - Fudan Universityfdjpkc.fudan.edu.cn/_upload/article/files/ac/6b/... · ©...
Transcript of Session 11 Pricing A - Fudan Universityfdjpkc.fudan.edu.cn/_upload/article/files/ac/6b/... · ©...
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MarketingManagementSession11
QianXU,PhD.Spring,2017
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Today’sagenda
•Review•Pricing:theoryandpractice•Pricingtricks
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Part1Review
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Lasttwoweeks
•1.1NewProductDevelopment•1.2Conjointanalysis•1.3Servicevs.Good
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1.1 ProductlifecircleIBM Dell
&HP
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1.1.1Typesofnewproduct
Types Apple exampleanew-to-the-worldproduct iPhoneanewproductline Macbook Airanadditiontotheexistingproductline iPhoneSEanimprovementofexistingproduct iPhone 6sarepositioningofanexistingitem iPhoneRose
Gold
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1.1.2Whyisnewproductdevelopmentnecessary?
CompetitionAdaptation
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1.1.3 Howtodonewproductdevelopment
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1.1.4Whotodevelopthenewproduct
•R&Ddepartmentisincharge•MKTdepartmentgetsinvolvedintheearlystageofnewproductdevelopment.
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1.1.5Whichcomesfirst?Marketvs.Product?
•Marketfirst:•Benefit:Noneedtoworryaboutthedemandsize•Cost:Maymissthechancetoinventrevolutionaryproduct
•Productfirst:•Benefit:Pioneeringadvantage•Cost:Educatecustomers,greaterriskoffailure.
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1.2Conjointanalysis(联合分析)
CONsider attributesJOINTly
•PaulE.Green(1978)
•Green, P. and Srinivasan, V. (1978) Conjoint analysis in consumer research: Issues and outlook, Journal of Consumer Research, vol 5, September 1978, pp 103–123.
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1.2.1Whatconjointanalysiscando?
• Newproductdevelopment• Pricing
Utilityofeachlevelforeachattribute
• Newproductdevelopment• STP
Relativeimportanceofeachattribute
• Newproductdevelopment• Marketstrategy
Marketsharesimulation
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1.2.2Basiclogic
• Bymanycomparisons,wemanagetocalculatetherelativeutilityofeachlevelforeachattribute.
Utilityofeachlevelforeachattribute
• Thebiggertheutilityrangeis,themoreimportantthisattributeis.
Relativeimportanceofeachattribute
• Thelargerthetotalutilityforoneproduct,thelargerthemarketshareitwillgain.
Marketsharesimulation
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1.3 ServiceMix
Puregood Majorgood Hybrid Majorservice
Pureservice
One-timeexchange
Computer
Restaurant
Airplane
Massage
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1.3.1Servicevs.Good
intangibility inseparability
variability perishability
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1.3.2 Whenservicefails
Respondfast
Admitmistakes
Providesolutions
Longtermvision
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MarketingMix:4P
Product Price Promotion Place
STP
Segmentation Targeting Positioning
MarketingAnalysis:5C
Customer Company Competition Collaborator Context
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Today’sobjectives
•Toknow:Whatisprice?•Tounderstand:Whyispriceimportant?•Toact:Howtopricing?
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Part2Pricing:theoryandpractice
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Howmuchshouldanengagementringcost?
A DiamondisForever钻石恒久远,一颗永流传
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2.1Definition
•Priceistheratioofthequantitiesofgoods/services thatareexchangedforeachother.
•Formsofprice•Currency•Mileage/point•Credit•Punishment
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2.1.1FormsofpriceCurrency
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2.1.1FormsofpriceCurrency
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2.1.1FormsofpriceMileage/Point
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2.1.1FormsofpriceCredit
A,B,C,D,&F
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2.1.1FormsofpricePunishment
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2.2 Whyispriceimportant?
•For sellers•Forbuyers
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2.2.1Forsellers
priceless=worthless?无价之宝=没有价值?
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2.2.2 Forbuyers
PriceUtility
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Beforecurrencyoccurred
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Total: $1,000,000
99%OFFCOUPON
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2.3Howtopricing?
Set up objectives
Determine demand
Estimate costs
Analyzing competitors
Select a pricing method
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2.3.1 Objectivesofpricing
•Survival•Maximumcurrentprofit•Maximummarketshare•Maximummarketskimming•Product-qualityleadership
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1)Objectivesofpricing:survival
Doessurvivalobjectiverequirelowprice?
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2) Objectivesofpricing:Maximumcurrentprofit
Doesmaximumcurrentprofitrequirehighprice?
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3) Objectivesofpricing:Maximummarketshare
Doesmaximummarketsharerequirelowprice?
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4) Objectivesofpricing:Maximummarketskimming
Good• Lesscompetitors
• Superiorproduct
Bad• Fatalifcompetitor'spriceislow
• Consumersmaybeunhappy
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5) Objectivesofpricing:Product-qualityleadership
Ishighpriceequaltohighquality?
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Luxurybags
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2.3Howtopricing?
Set up objectives
Determine demand
Estimate costs
Analyzing competitors
Select a pricing method
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2.3.2 Pricesensitivity
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2.3.2Howtocalculatepricesensitivity
•Survey•Priceexperiment•Statisticalanalysis
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2.3.2.1Survey
•Howmuchwouldyouliketopayforamarkcup?
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2.3.2.1Survey
•VanWestendorp’s pricesensitivitymeter•Gabor-Grangerdirectpricingtechnique•Conjointanalysis
https://www.qualtrics.com/market-research/pricing-research/
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1)VanWestendorp’s pricesensitivitymeter
• Atwhatpricewouldyoubegintothinktheitemis tooexpensive toconsider?• Atwhatpricewouldyoubegintothinktheitemis soinexpensive thatyouwouldquestionthequalityandnotconsiderit?
• Atwhatpricewouldyoubegintothinktheitemis gettingexpensive,butyoustillmightconsiderit?
• Atwhatpricewouldyouthinktheitemisa bargain – agreatbuyforthemoney?
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Q1- Pleaseindicateyouropinionsoverthepriceforamarkcup(马克杯,inRMB)
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
8 10 12 14 16 18 20
TooexpensiveToocheapExpensiveCheap
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IPP
PMEPMC
OPP
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VanWestendorp’s pricesensitivitymeter• Theindifferencepricepoint(IPP):the(median)“normal”priceinthemarketorthepriceofamarketleader.
• Theoptimalpricepoint(OPP):The“sweetspot”wherethenumberofpeoplewhofindthepriceacceptableismaximized,andresistancetopricechangesisminimized
• Pointofmarginalcheapness(PMC):thepointwheretoocheapcrossesnotcheap
• Pointofmarginalexpensiveness(PME):thepointwheretooexpensivecrossesnotexpensive
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2)Gabor-Grangerdirectpricingtechnique
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3)Conjointanalysis
51
Attributes
Levelsforeachattribute
Twoproductprofiles
Atypicalchoicetask
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2.3.2.2 Peoplearelesspricesensitivewhen
•Therearefewornosubstitutesorcompetitors;•Theydonotreadilynoticethehigherprice;•Theyareslowtochangetheirbuyinghabits;•Theythinkthehigherpricesarejustified;•Priceisonlyasmallpartofthetotalcostofobtaining,operating,andservicingtheproductoveritslifetime.
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1)Fewornosubstitutesorcompetitors
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2)Donotreadilynoticethehigherprice
15 RMB
10.2 RMB
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3)Slowtochangetheirbuyinghabits
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4)Thinkthehigherpricesarejustified
•Luxurybrand•Uniquedesign•Limitededition
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5)Priceisjustasmallpart
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2.3.3Howtopricing?
Set up objectives
Determine demand
Estimate costs
Analyzing competitors
Select a pricing method
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2.3.3TypesofCosts
Fixed Costs
Costs that don’tvary with sales or production levels.
Executive SalariesRent
Variable Costs
Costs that do varydirectly with the
level of production.
Raw materials
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2.3.4Howtopricing?
Set up objectives
Determine demand
Estimate costs
Analyzing competitors
Select a pricing method
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Cananyproducthavenocompetitors?
Debate
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2.3.5Howtopricing?
Set up objectives
Determine demand
Estimate costs
Analyzing competitors
Select a pricing method
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Pricingmethod
Orientation Pricing methodCost • MarkupPricing
• TargetReturnPricingValue • PerceivedValuePricing
• ValuePricingCompetition • Going-RatePricing
• Sealed-BidPricing• Auction
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2.4Teampractice:Pricing
•Requirements:•Pricingforyournewsmartphone•Handitinbytheendofthisclass•Gradedbyme,nopresentation.
•Evaluationcriteria:•Correctnessofunderstandingconcepts
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Part3Pricingtricks
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3.Psychologyofpricing
•Referencepoint•Price-qualityassociation•Priceendings•Howtochangeprices
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3.1Referencepoint
5000RMB/m
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3.1Referencepoint
6000RMB/m
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LaoLuo
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3.2Priceendings
Leftanchoring:
1.99vs2.00
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3.2Priceendings
Specificending:
20,372vs20,000
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3.3Howtochangeprices
•Whenyouwanttoincreaseprice•Whenyouwanttodecreaseprice
Price Cost
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3.3.1Whenyouwanttoincreaseprice
•Addsomethingnewtoyourproducts•e.g.,haveyouevernoticediPhoneincreasesitsprice•8G→16G→64G
•Reducesomethingfromyourproducts
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3.3.2Whenyouwanttodecreaseprice
•Decreasethepriceifyourcustomersarepricesensitive.
•Ifnot,increasetheportionofyourproducts•e.g.,100for1yearinsurance,now15months
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PS4
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1)Wantithardtonoticethechange?
•Doitinmultipledimension
Sameprice7’→6’
70→60RMB
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2)Wantiteasytonoticethechange?
1 2
•Doitinsingledimension
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Afterclass
• ReadChapter14• Quiz3:Jun.7,Chapters11-14&20(Quizzedchapterswon’tappearinfinalexam)• Termprojectpresentationschedule(markedinE-learning’sschedule)
Date I IIMay.24 1 8May.31 6 3Jun.7 2 5Jun.14 4 7