When you finish this chapter, you should: Understand how pricing objectives should guide strategic planning for pricing decisions; understand choices the marketing manager must make about price flexibility and price levels over the product life cycle; understand the many possible variations of a price structure, including discounts, allowances, and who pays transportation costs. | Chapter 17: Pricing Objectives and Policies When you finish this chapter, you should 17-2 Chapter 17 Objectives 1. Understand how pricing objectives should guide strategy planning for pricing decisions. 2. Understand choices the marketing manager must make about price flexibility. 3. Know what a marketing manager should consider when setting the price level for a product in the early stages of the product life cycle. 4. Understand the many possible variations of a price structure including discounts, allowances, and who pays transportation costs. 5. Understand the value pricing concept and its role in obtaining a competitive advantage and offering target customers superior value. 6. Understand the legality of price level and price flexibility policies. 7. Understand the important new terms. Strategy Planning for Price Exhibit 17-1 Pricing objectives Target Market Price Promotion Place Product Geographic term — who pays transportation and how Discounts and allowances— to whom and when Price levels over product life cycle Price flexibility 17-3 Summary Overview Price is one of the four major variables a marketing manager controls. Price-level decisions are especially important because they affect both the number of sales a firm makes and how much money it earns. The Price Equation Price is the amount of money that is charged for “something” of value. Almost every business transaction in our modern economy involves an exchange of money--the Price--for something. Pricing Objectives and Policies Marketing managers must develop specific objectives and policies for Price-level decisions in each of the following areas. Flexibility. Policies should explain how flexible the company will be toward altering the price. Level over the Product Life Cycle. Strategies for dealing with price issues across the product life cycle must be developed. Use of Discounts and Allowances. Where, when, and to whom discounts and allowances are to be offered must be decided. Paying for . | Chapter 17: Pricing Objectives and Policies When you finish this chapter, you should 17-2 Chapter 17 Objectives 1. Understand how pricing objectives should guide strategy planning for pricing decisions. 2. Understand choices the marketing manager must make about price flexibility. 3. Know what a marketing manager should consider when setting the price level for a product in the early stages of the product life cycle. 4. Understand the many possible variations of a price structure including discounts, allowances, and who pays transportation costs. 5. Understand the value pricing concept and its role in obtaining a competitive advantage and offering target customers superior value. 6. Understand the legality of price level and price flexibility policies. 7. Understand the important new terms. Strategy Planning for Price Exhibit 17-1 Pricing objectives Target Market Price Promotion Place Product Geographic term — who pays transportation and how Discounts and allowances— to whom and when
