Chapter 9 discuss the importance of understanding customer value perceptions and company costs when setting prices, identify and define the other important internal and external factors affecting a firm’s pricing decisions, describe the major strategies for pricing imitative and new products, explain how companies find a set of prices that maximizes the profits from the total product mix, discuss how companies adjust their prices to take into account different types of customers and situations. | Chapter Nine Pricing: Understanding and Capturing Customer Value Discuss the importance of understanding customer value perceptions and company costs when setting prices. Identify and define the other important internal and external factors affecting a firm’s pricing decisions. Describe the major strategies for pricing imitative and new products. Explain how companies find a set of prices that maximizes the profits from the total product mix. Discuss how companies adjust their prices to take into account different types of customers and situations. Discuss key issues related to initiating and responding to price changes. 9- Copyright 2007, Prentice Hall, Inc. The Past 1970s: Toys ‘R’ Us emerges as a toy retailing category killer, offering greater product selection and lower prices than its small store competition. Explosive growth occurs. Late 1990s: Wal-Mart uses toys as a loss leader, pricing lower than Toys ‘R’ Us and becomes the largest toy retailer. Toys ‘R’ Us – Pricing for | Chapter Nine Pricing: Understanding and Capturing Customer Value Discuss the importance of understanding customer value perceptions and company costs when setting prices. Identify and define the other important internal and external factors affecting a firm’s pricing decisions. Describe the major strategies for pricing imitative and new products. Explain how companies find a set of prices that maximizes the profits from the total product mix. Discuss how companies adjust their prices to take into account different types of customers and situations. Discuss key issues related to initiating and responding to price changes. 9- Copyright 2007, Prentice Hall, Inc. The Past 1970s: Toys ‘R’ Us emerges as a toy retailing category killer, offering greater product selection and lower prices than its small store competition. Explosive growth occurs. Late 1990s: Wal-Mart uses toys as a loss leader, pricing lower than Toys ‘R’ Us and becomes the largest toy retailer. Toys ‘R’ Us – Pricing for Success Case Study The Present Toys ‘R’ Us tries price matching and fails miserably, losing sales, profit, and market share. New ownership closes stores, cut costs, and steps away from the price war. Efforts focus on top-selling, higher margin or exclusive items, store atmosphere, shopper experiences, and customer service. 9- Copyright 2007, Prentice Hall, Inc. What Is a Price? Narrowly, price is the amount of money charged for a product or service. Broadly, price is the sum of all the values that consumers exchange for the benefits of having or using the product or service. 9- Copyright 2007, Prentice Hall, Inc. Major Considerations in Setting Price Customer perceptions of value Other internal and external considerations Marketing strategy, objectives, mix Nature of the market and demand Competitors’ strategies and prices Product costs 9- Copyright 2007, Prentice Hall, Inc. Customer Value Perceptions Customer-oriented pricing: Involves understanding how much value .
